FARMINGTON -- Farmington City Council last week unanimously approved a $4.3 million general budget for 2021, which Mayor Ernie Penn described as conservative because of unknowns going into the new year.
The approved budget includes about $50,400 for a 3% cost-of-living raise for city employees, another full-time police officer position and two new police vehicles.
The budget also includes three additional firefighter positions. Fire Chief Bill Hellard is applying for a grant that would pay up to 100% of the cost for salaries and benefits for three positions for three years. The budget includes money for the three positions, in case the grant is not approved.
In addition, the parks budget has two new line items for expenses. The city is budgeting $125,000 for capital improvements and $25,000 for engineering fees for trail design, if needed.
Going into 2021, the city is looking at two unknowns, Penn said.
"We do now have a Democratic president according to whoever determines that, and along with that, the increase in covid cases could greatly affect the economy again," Penn said. "I think it's very appropriate to be very conservative."
Penn noted that as a banker for many years, he is conservative when it comes to projected revenue and projected expenses.
"You guys have known me long enough. I was in the bank business for 40 years, so you know I'm going to put my banker's hat on and be very conservative and not spend all the money we have in income or reserves for our budget."
In a Nov. 1 memo to City Council members, Penn listed major changes in the 2021 budget.
The projected income from the city sales tax will increase by $125,000, from $1,350,000 in 2020, to $1,475,000 in 2021. Through Oct. 31, the city already has received $1.5 million from its local sales tax revenues.
Projected revenue from the state sales tax will increase by $60,000, from $1.2 million in 2020, to $1,260,000 in 2021. Through Oct. 31, the city has received $1,130,000 in revenue from the state sales tax, which is distributed to counties and cities based on per capita.
In his memo, Penn notes 2020 has been a difficult year because of the covid-19 pandemic but at the same time, the city has been "blessed" because sales tax collections have gone up this year, compared to the same period last year.
"But we must be prepared for change," Penn said.
He said he believes the city should be financially responsible and maintain at least six months of operating money in a reserve account. For Farmington, that amount would be $2 million, Penn said. He noted the city has a certificate of deposit with a balance of more than $2 million at Bank OZK to provide a six-month cushion of emergency operating money.
In all, the city has bank balances that total almost $6.8 million, including $1.5 million in a money market account at First Security and $1.3 million in a money market account with Arvest Bank.
For 2021, the city is projecting to receive almost $4.3 million in revenue, according to the budget approved by the council Oct. 9. This compares to $4.6 million in revenue in the 2020 budget, but the 2020 budget also included a transfer of $650,000 from reserves for two major capital improvement projects for the police department and public library.
In addition to sales tax revenues, the city projects to receive $475,000 from turnback fees, $375,000 from franchise fees and $130,000 from building inspection fees. The city is adding a new line item this year for revenue, payments in lieu of improvements. This is money developers pay, $800 per lot, instead of dedicating land for green space in residential subdivisions. For 2021, the city projects to take in $150,000 in these funds.
For expenses, the city is budgeting $2.8 million for payroll for employees paid out of the general fund. General fund payroll expenses also include $60,000 for the city attorney's position, $125,000 for elected officials and $20,000 for the planning commission. None of these positions will receive a raise in 2020.
Several questions were asked by council members and others.
Council member Diane Bryant asked if the new money budgeted for park improvements and engineering fees, a total of $150,000, would go to Creekside Park, not the sports complex.
Penn responded that the ballpark is in good condition and the city does not anticipate any needs at the sports complex.
Judy Horne, a member of Farmington Planning Commission, wanted clarification on how payments in lieu of improvements would be allocated. She asked if that money would go to parks.
Penn told her it would be used for parks, not other departments.
Penn reminded everyone that the city was dedicating $150,000 for park improvements and/or engineering fees in 2021. He said recommendations on how to spend that money would come from the city's Parks and Recreation Committee, chaired by council member Sherry Mathews.
For 2021, the library's operating budget is $253,226. Revenue includes a $55,000 transfer from the city general fund and about $197,000 from Washington County Library System. Expenses include $180,000 for payroll and $32,000 for books and media.
The 2021 street fund projects $766,100 in revenue, which includes about $407,000 from state turnback funds and more than $300,000 from reserves for street repairs.
Budgeted expenses for the street fund include $300,000 for street repairs, $150,400 for street lights, and $205,500 for payroll.
General Fund 2020 Budgets
Animal Control: $84,151