City budgets for challenges of growth, volatile economy

Running a city is not for the faint of heart. Those who step up to do so are a staunch breed.

When it comes to Sallisaw’s leadership, it’s up to City Manager Keith Skelton, Finance Director Robin Haggard, Mayor Ernie Martens and City Commissioners Josh Bailey, Ronnie Lowe, Julian Mendiola and Kristin Peerson to plan, implement and make difficult decisions.

And through it all, appreciation for those efforts is at a premium.

Part of making sure the city operates smoothly — and within its means — are the annual budget meetings, which were conducted Monday and Tuesday at Sallisaw’s city council chambers.

The budget for fiscal year 2024 is expected to be finalized for the June 12 city commissioners meeting, at which time it will be adopted for the July 1 start of the fiscal year.

In reviewing with the city commissioners the peaks and valleys of the previous year, Skelton admitted that “this year’s been a challenge.”

But the city staff has met that challenge by shepherding a well-orchestrated budget for fis- cal year 2023, scrutinizing expenditures, surviving supply chain delays, attracting business and industry, and competing in the global marketplace for the best employees to serve the community.

Despite the challenges experienced in the past year, Skelton showed that sales tax receipts remain stable and inquiries on building and economic development remain robust, which shows the city is growing.

But, as Skelton pointed out, “growth and economy has already placed some strains on our operations.”

And for those who crunch the numbers, Skelton admitted that a budget of the size proposed for FY24 — General Fund of $25,922,840 and Sallisaw Municipal Authority of $42,501,963 — may seem disproportionate for a city with a population of 8,500, the intricacies of the city’s accounting practices make it appear excessive due to transfers and flowthroughs to the SMA for revenues such as sales tax and use tax receipts. To be sure, an accounting degree is helpful when trying to keep up with all the working parts of a city budget. The bottom line is that the General Fund realizes a $2.1 million net after all transfers to other entities.

“The challenge is having a balanced budget and making everybody happy,” Haggard admitted.

Personnel at $11.3 million is a good portion of the proposed $26 million budget, and, as Skelton points out, that doesn’t include a cost-of-living adjustment of almost $700,000. (By the way, there was no cost-of-living adjustment in 2013 and 2019.)

And when it comes to personnel, competing with the private sector is a battle in which the city is not faring as well as it would like. While Skelton observes that the city’s compensation package is competitive with a benefits package that includes health insurance, vacation and more, Martens counters that the average working Joe is more interested in take-home pay rather than benefits.

Therefore, before the June 12 meeting, Skelton and Haggard are tasked with considering the possibility of offering signing bonuses in order to compete for employees, as well as revamping the city’s progressive compensation scale for hourly employees. The expectation is there would be no cost-of-living adjustment as part of the calculations, but any merit raises would still be available. A similar plan for salaried employees was also requested for board consideration.

In other staff presentations, George Bormann told the city commissioners that “it’s been a great year” for grants, with a total projects amount of $14.4 million. Economic development efforts are still being aggressively pursued, and he expects to be able to announce soon additional successes for the city

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Budget summary

• Continue to plan future infrastructure improvements needed as the community grows; identify funding needed

• Continue to monitor GRDA expenses, including PCA issues city is facing

• Need for continuing revenue stream to build reserves for future infrastructure needs and improvements

• Measure how the opening of the VA facility will affect the community in 3 to 5 years

• Continue to be fiscally responsible in how public funds are utilized for operations and capital improvements

• Address future landfill capital needs

• Address aging infrastructure and equipment

General Fund

Proposed budget: $25,922,840

Change from 2023: $577,454 more (2.28% increase)

Sources of revenue:

• Taxes (sales, use, tobacco, hotel/motel)

• Gross receipts taxes (gas, cable, electric, telephone, etc.)

• Permits and licenses (animal, building, electrical, etc.)

• Municipal court fines

• Interest

• Swimming pool revenue

• Sale of property and equipment

• Property rental

• Refunds

• Transfers from SMA

• Balance forward amounts

Expenditures:

• Salaries and benefits

• Building, general liability, vehicle insurance

• Daily operating supplies (office, fuel, etc.)

• Equipment maintenance

• Vehicle maintenance

• Facility maintenance

• Software licenses

• Sports complex

• Brushy Lake Park

• Transfers out of sales and use tax

• Transfers out for non-profits

Capital improvement

Proposed budget: $2,949,632

Change from 2023: $342,656 less (10.41% decrease)

Infrastructure improvement

Proposed budget: $3,074,492

Change from 2023: $34,554 less (1.11% decrease)

Sallisaw Municipal Authority

Proposed budget: $42,501,963

Change from 2023: $3,325,581 more (8.49% increase)

Revenue: $36,162,163

Appropriations: $31,149,763

Tax transfers: $4,386,000

Debt payments: $3,385,525

Sources of revenue:

• Taxes from the General Fund

• Utility revenue (water, electric, waste, telecommunications, etc.)

• Interest

• Penalties

• Bad debt recovery

• Utility connection revenue

• Balance forward amounts

Expenditures:

• Transfers out of sales and use tax

• Transfers out to other funds for support

• Electric purchase power costs

• Telecom programming, telephone and internet costs

• Land purchases related to utilities

• Engineering fees

• Other utility related expenditures

• Debt service for long-term debt