Staff Accountant and Bookkeeper Jennifer Basham reviewed on Oct. 20 the general fund budget transfers as of June 30 for Board of Aldermen approval.

She said that as of June 30, the general fund is still in the red.

“I did not transfer enough as of (June 30) in order to make sure that there was enough cash in all the other funds. I did not want to over-transfer when I made the year-end transfers, and knowing that there would not be enough to go into the general fund,” Basham said.

As of the end of the fiscal year, June, the general fund is negative $882,001.37. This means that the aldermen have to transfer in $883,000 from the proprietary funds to balance it out.

Proprietary funds are used to account for the city operations that are financed and operated in a business-like manner. They receive significant financial support from user fees and charges.

Ward 1 Alderman Ray Mortimeyer asked if the proprietary funds will be completely depleted afterwards.

The plan was to transfer $200,000 from the electric fund, $75,000 from the waterworks fund and $608,000 from the natural gas fund. After the transfers, the general fund will have $998.63, the electric fund will have $22,543.35, the waterworks fund will have $27,266.27 and the natural gas fund will have $31,399.44 of spendable cash.

“I’m to that point…you all as a council have to, it’s time for you all to act because I can’t make the motions. I can’t do the work. It’s your turn,” Basham said.

Mayor Pitts Lesesne said the municipal advisor and auditor met with department supervisors and aldermen and said the general fund cannot support the city, and they are taking too much from the proprietary funds.

“I’ve been preaching for the last year that we are going broke, and the reason being is, in 2020, we took 20 percent of the revenue away from our fee base, that is, all of our electric, our natural gas, 20 percent in 2020. We took 18 percent in 2021, and the list goes on. 2024, we took another 20 percent. 2025, we took another 20 percent,” Lesesne said. “When you’re taking 20 percent from your proprietary funds, and they’re still trying to operate themselves, there’s no money left to put into upgrades.”

Since the city has not been raising its rates for many years, the amount of money it retains has been steadily decreasing, and now, Lesesne said the city is finding it difficult to even make payroll.

He mentioned that unnecessary expenses, such as contracting out work that the city could perform itself, adds up over time. Lesesne mentioned that every auditor they’ve spoken to has instructed them to prioritize the three most significant expenses: contractors, wages, and retirement. 

“The only way to raise the general fund, most people don’t understand municipal finances. The only way to raise your general fund is you have to have taxes. We don’t have them. We don’t have property tax. We don’t have real estate tax. We don’t have user tax,” Lesesne said. “Without those taxes, we are missing three valuable pieces of revenue that we don’t get.”

To help run the city and continue giving raises, officials use proprietary funds to supplement the general revenue fund, which is unsustainable and could lead to the city cutting services.

“I think you might have a misconception that we’re doing the rate increases so that we can shore up our general fund,” Lesesne said. “The rate increases are because our electric company has to buy poles and transformers and put poles in the ground too. So the rate increases are going to build their funds back up so that they can actually have what they’re supposed that the people are paying our fees for.”

Since enterprise funds are fee-based funds, Lesesne said that surplus funds have to be built up on them first. They are a specific type of proprietary fund and are accounts for city operations that provide a service to citizens. They are financed primarily by a user charge and are comprised of the electric, water, natural gas, sewer and treatment plant funds.

“When people pay us, they are paying us not only to provide a service to them, (but) to put money aside for emergencies, and to put money aside to increase the livability of that asset,” Lesesne said.

He added that the rate increases are to build back the funds in the proprietary accounts that the board has emptied, and they need to find another way to build up the general fund.

Ward 1 Alderman Louis Raineri asked Basham what they could do to rebuild the funds, and Basham said that the only thing they could currently do in the general fund is to cut expenditures and raise revenues, which includes taxes.

Lesesne called the general fund “the judgment of your city.”

“Our general fund has ended the year, as far back as I can see, at zero, but it started the year pulling money from the proprietaries,” Lesesne said.

As the cost of living for employees increases, Raineri mentioned the possibility of adding a property tax or real estate tax to a ballot for citizen voting. At the same time, Lesesne said that the city has to do whatever it can to balance the budget.

The last thing they want to do is start cutting the number of employees or affect employee benefits. Lesesne said that they will meet with the advisors from LAGERS to learn more about it and how it’s affecting the city.

“They’ve been increasing our rates by one percent every year, and one year, two percent and three percent, on top of everything else that we were doing (in) the previous administration as far as giving raises, and then multiply it by the multiplier and then they were adding one percent,” Lesesne said.

A motion to balance the budget was approved with a 5-0 vote.

In other business, a motion to accept Bill No. 2248 was approved with a 5-0 vote, and became Ordinance 1260. The new ordinance records the gas easement as instrument number 202603063 with the Crawford County Recorder of Deeds from grantor, Elite, LLC, to the city of Cuba.