An emotionally charged budget debate among Iola City Council members this week featured allegations of changing numbers to skew budget increase projections.
Councilman Kendall Callahan, in a telephone conversation with the Register, further clarified his remarks about what he said are misleading budget figures.
One example, Callahan said, is with the city’s electric utility transfers.
Iola has traditionally supplemented its general fund with reserve transfers — literally pulling funds from one pot to put into another.
The lion’s share of the transfers come from the city’s two largest revenue producers, it’s electric and gas reserves.
In the 2012 spending plan prepared for council members to review this week, the city’s general fund would receive a $1,028,000 transfer from the electric fund.
The budget worksheet given to council members reported the figure as a 1 percent increase over 2011.
There’s the rub.
Callahan says the increase should have been more accurately described as 24 percent.
That’s because Iola’s former city commissioners, in drafting the 2011 budget, approved an electric fund transfer of $825,000. But the 2012 budget lists this year’s assumed transfers at a much higher figure, $1,018,000.
“I’m sure people would raise a bigger fuss if they realized electric transfers are increasing about 25 percent, not 1 percent,” Callahan said.
THERE’S MORE to the story, Iola City Administrator Judy Brigham responded.
She acknowledged that the commissioners originally planned for an $825,000 transfer from the electric reserves for this year.
Brigham is recommending that by year’s end, the city institute a number of other changes in utility transfers — for example, reducing the wastewater utility fund transfer from $300,000 to $100,000 while increasing the electric and natural gas reserve transfers.
The net result, Brigham explained, is that the city should amend its budget by year’s end to add about $17,000 in utility transfers — bumping up the total from $1,875,000 to $1,893,000 — from what commissioners approved last summer.
“You have to remember, these budgets are set a full 18 months before you know exactly what you have spent,” Brigham said. “It’s rare you go through a year without needing a budget amendment.”
But Callahan said that the $1,018,000 figure for the electric fund’s 2011 transfer was used in budget forms presented to council members at this week’s workshop instead of the $825,000 authorized by last year’s commission.
“That’s what I meant by saying numbers have changed,” Callahan said.
The higher electric fund transfer was used, Brigham said, to give a more realistic picture of the city’s current budget status when the budget is submitted to the state.
It will still be up to the city council to approve the higher electric fund transfers, Brigham said, with a budget amendment.
UTILITY FUND reserve transfers have become an annual topic at budget time in Iola.
“The former commission’s goal, and I assume it’s the same for the council today, is that we keep our property taxes level,” Brigham said.
Brigham’s budget proposal for 2012 puts in place combined utility fund transfers of $1,688,000 — down from the $1,875,000 approved by last year’s commission — and the $1,893,000 amended figure Brigham used in the budget presentation this week.
Brigham is also recommending that the city put in place a formula that determines just how much to transfer from the utility funds.
“We’ve come up with a 12 percent figure from total revenues generated by each utility,” Brigham said referring to the proposed $1,028,000 electric fund transfer in 2012.
The 12 percent was devised by adding together 5 percent — the amount the city would receive in its general fund through a franchise fee if Iola residents purchased electricity from a private supplier — plus 7 percent to pay for administrative tasks done by city staff, such as issue electric bills and maintain Iola’s electric grid.
“We figured a consistent 12-percent transfer rate would eliminate some of the debate of about how much the city can transfer from year to year,” Brigham said.
As an aside, for the past several years the city has also transferred $125,000 from Iola’s electric reserves to help fund the city’s Recreation Department. The city also declined transferring reserves from its water fund, which has operated at a deficit since 2009, and is certain to prompt the city council to approve higher water rates at some point this fall.
The 2012 budget is expected to be discussed again Monday when council members meet for their regular twice-monthly meetings. The 6 p.m. meeting at the New Community Building in Riverside Park is open to the public.
