The Waupaca Common Council approved financing this year’s capital projects with a State Trust Fund Loan but not before a department head and a couple council members questioned it.
Last November, the council voted to borrow up to $1.17 million to fund capital projects for 2015 and 2016.
When the council met on Tuesday, April 21, before it was a resolution authorizing a borrow not to exceed $841,200 from the State Trust Fund Loan Program for financing 2015 capital projects only.
The council approved that resolution by a vote of 9-1, with Deb Fenske voting against it.
She thanked Finance Director and City Treasurer Kathy Kasza for saving the city money and then said, “We worked on this last year, and now it’s all changing. I don’t get this. I thought that we were all in agreement that the budget is the budget for two years.”
Kasza became the city’s new finance director after the council completed the 2015 budget process.
After reviewing the city’s current debt structure and the council’s approval of the purchase of the projects, she said staff recommended the city borrow for only 2015 projects and equipment purchases and delay the 2016 project funding until the 2016 budget process.
In an April 15 staff report to the council, Kasza wrote, “This splitting of the initial amount into two separate borrowings will reduce the interest amount paid by approximately $7,000 and will add additional savings should the 2016 issue be funded with a shorter term (five year versus 10 year).
“Staff looked into the reduction of the term for the 2015 borrowing to further savings of interest costs, however, due to the amount being borrowed to fund the projects already approved by council it would be hard to shorten the payment terms without impacting the city’s taxpayers in future years until there is a significant decrease in the tax supported debt service amounts and the borrowing capacity of the city is available to allow for additional amounts.
“The amount will also keep the debt service levy amount flat for 2016 until the city applies the $90,000 budgeted for debt reduction in the 2015 budget. Staff will be bringing that request at a future meeting for council’s consideration.”
She told the council splitting the borrow leaves $331,800 for 2016 projects.
That compares to the $455,000 which was budgeted for 2016 capital projects.
“The council only approved $1 million for all the total projects,” Kasza said.
In the Public Works Department, $200,000 was budgeted in both 2015 and 2016 for street rehab projects.
The bids for this year’s street rehab projects came in at $292,342, almost $100,000 higher than anticipated, she said.
In addition, the bid to replace the department’s 1995 front end loader came in at $176,791, compared to the $150,000 budgeted for that item.
Kasza said funds either need to be available within a project or funds have to be pulled from somewhere.
For 2016, the recommended borrow for street rehab is now $76,800 instead of the budgeted $200,000.
“First of all, you didn’t talk to me about that, which is unfortunate,” said Public Works Director John Edlebeck, whose last day on the job is Thursday, April 30.
The city will sell the hauling truck and front end loader, which are being replaced this year.
Edlebeck said in past budgets, former City Treasurer Jean Peterson credited funds from the sale of equipment back to his department.
He expects the sales of the vehicles to exceed the $26,000 difference between what was budgeted for the new front end loader and what the bid is for it.
While he understands Kasza’s desire to show street rehab is over what was budgeted for it, he said, “But that isn’t how 2015 was budgeted.”
Ald. Paul Hagen said, “I think the solution would be to designate the sale of the equipment back into the street fund for 2016.”
Kasza said until the city sees the money from the sale of the equipment being replaced, it cannot guarantee those funds will be in there.
“I’d like the city to be more fiscally conservative,” she said.
Hagen said, “I just take issue with the fact that we won’t get those funds back for that equipment. The city always has. I agree with being fiscally conservative, but we will easily have it in the future.”
Ald. Steve Hackett questioned why the borrow still included $20,000 for South Park’s Phase 2 project when the council decided to give the Parks and Recreation Department the $21,000 it realized in savings when Phase 1 came in under budget.
Kasza said the direction received at last week’s council meeting was to allocate that $20,000 to a 2015 Project Contingency Fund to fund any change orders or unexpected capital purchase requirements, with council approval.
That amount would also be available, if unexpended, toward the 2016 capital projects, she said.
During last week’s discussion, City Administrator Henry Veleker told the council a budget is a planning document.
He said when Kasza came on board last November, she was told to give her opinion.
“We’re trying to get some fiscal discipline,” Veleker said.