The city of Delaware is in a sound financial position, according to city officials, which gives them the opportunity for City Council to revisit the five-year capital improvement plan in the coming weeks to discuss possible updates and transfer of additional funds.
The general fund revenue is projected to increase 9.5 percent in 2017 compared with 2016 budgeted revenues. The main drivers are a 10.3 percent increase in the collection of income tax and 47 percent increase of development-related fees, as 2016 is expected to become the second-highest year of residential permits in the last decade at about 300 new permits.
Council spent the first 60 minutes of its 6 1/2-hour work session Saturday talking about allocating a surplus for local road maintenance. Due to financial management policy last revised in 2014, the city has a target goal of the year’s end fund balance at 17 percent of its expenditures along with a reserve fund that represents 5 percent of all general fund revenues.
Councilwoman Lisa Keller, 2nd Ward, noted that the city estimated the year’s end balance for 2016 to be 19.62 percent of expenditures, which includes a surplus of more than $526,000 that could be used to meet Delaware’s road maintenance needs along with funds from the general reserve fund.
Though not brought up in the discussion, Delaware voters last month rejected, by a two-thirds margin, a proposal to increase the income tax to 2 percent, which would have generated an annual $2.2 million for road maintenance and transportation network improvements. The current CIP does not have any funds allocated for local road maintenance in 2018 and 2019.
Finance Director Dean Stelzer highlighted that the year’s end fund balance for 2016 carries over into next year. The 2017 year’s end balance is now budgeted at $3,686,212, or 17.09 percent of that year’s expenditures.
Stelzer proposed transferring general fund dollars at 15 percent of its income tax revenue into the CIP in 2014 but council did not incorporate it at the time. But the 2017 budget does reflect that target at $2,039,700, which is $284,700 higher than the amount reflected in the current CIP (now $1.75 million).
“That’s where we start as opposed to starting from the other way and then what’s left we transfer to the CIP,” he said.
Stelzer proposes to apply that target level in 2018 and following years within the CIP.
Additionally, City Manager Tom Homan said it would still need to be determined on what capital improvements should be addressed for the additional funds.
“Because we have those additional dollars, we’ve got to decide in early part of (2017) where do you want them to go,” he said.
Council will continue its discussion of possibly adding to the capital budget at its regular meeting on Dec. 12.
