Greeley city staff are set to create a revenue stabilization fund that will act as a savings account for the growing city to combat regular fluctuations in revenue sources.
Greeley City Council gave preliminary approval to the fund’s creation at a work session Tuesday night, and city staff will bring a resolution before the council for a vote at a later date that has yet to be determined.
As the city still feels the effects of rapid growth and COVID-19 impacting their sales taxes, city staff has been searching for ways to deal with the wildly volatile swings in revenue.
The city has two primary sources of revenue: sales and use taxes and property taxes. Both have been difficult to predict since 2018, affecting city staff’s ability to craft an accurate budget.
In July, the city contracted PFM Consulting Group to analyze the city’s volatile budget and come up with a solution. The consultants found that Greeley’s primary revenue sources are more volatile than the average seen in other cities across Colorado and the U.S.
PFM Consultants gave Greeley a volatility score of 7.9 for sales and use tax compared to the 7.2 average across the U.S. This is largely due to factors like COVID-19 and the city’s rapid growth creating changes in how residents shop and interact with businesses.
Consultants also scored the volatility of Greeley’s property tax revenue at a 9.8 compared to the 6.2 across the U.S.
Councilman Tommy Butler had asked if this scale maxed out at 10, and Budget and Policy Director Caleb Weitz answered that it doesn’t go much higher than 10.
Greeley’s growing oil and gas industry — an industry that’s familiar with price and value swings — are a major factor in the volatility, according to PFM’s findings. In 2018, oil and gas made up 5% of the city’s taxed property, and in 2023, that percentage rose to 34% of taxable property.
In response to these discoveries, PFM proposed the concept of a revenue stabilization reserve during the council’s budget retreat in July, and the city was given the go-ahead to make preparations for it.
“The city has done a very good job historically of having a conservative budgeting approach,” Weitz said. “As this volatility is growing, specifically with the larger proportion of oil and gas in property tax revenues, we think that it’s appropriate to adjust our reserve strategies to match our changing environment.”
This reserve cash will be supplemental to the general fund reserves required by state law, which the city keeps better funded than they’re required to. The state only requires the city to keep a reserve of 3% of the yearly budget, whereas the city keeps nearly 17%, or $26 million.
City staff and city council are restricted from accessing that reserve of money except in the case of a severe economic downturn or natural disaster. Weitz elaborated to Mayor John Gates that the revenue stabilization reserve will not have those restrictions and will primarily cover the city’s finances if it receives less revenue than expected.
“The goal of this reserve is to really be able to smooth any peaks and valleys in our less predictable revenue sources,” Weitz said.
The city plans to deposit a minimum of 3% of its yearly budget into this new reserve, up to a maximum of 12%. The city has already budgeted for a $4.8 million initial investment upon approval of the reserve.
Councilman Johnny Olson asked for clarification regarding the circumstances in which money from this budget could be used, specifically if it would be subject to council approval. Weitz clarified that the city would need to run any requests to dip into these reserves by the council and would do so during their quarterly updates if they need to go into the reserves.
“I like the program a lot,” Gates said. “I like being able to tell people that we’re in good financial condition, and it lets me sleep peacefully at night.”
Read More Details
Finally We wish PressBee provided you with enough information of ( Greeley City Council approves additional reserve funds to weather fluctuating revenue )
Also on site :
- Man Utd vs. Aston Villa: live broadcast , Predictions and Lineups
- Anfield Showdown: Liverpool and Palace Lineups, live stream , and Match Forecast
- Chloe Kelly grateful for Arsenal journey after being in a ‘dark place’