The 2019 Budget Challenge
In the September 20, 2018, Mayor’s Corner, it was noted that “The budget for 2019 would be significantly tested…” What wasn’t noted in the Mayor’s Corner nor included in the final 2018 Fiscal Year Budget and the 2019 Fiscal Year Budget, was the cost impacts due to cancellation of the WWTP Black Castle contract. After the dust settles and the extra costs required (to 1) negotiate the Black Castle settlement, 2) to remediate the plant site,
3) design a crossing under Cypress Creek, and 4) pay the additional legal costs) to cancel the Black Castle contract are finalized, somewhere in the range of $1,000,000 will have been wasted. As noted in the Mayor’s Corner, the yearly budget for Wimberley is approximately $1.3 million. Food for thought: The wasted dollars plus the $2.2 million in forfeited grants would have entirely funded the treatment plant with a couple of hundred thousand dollars left over.
Looking at just the General Fund: At the start of Fiscal Year 2018 (October 1, 2017), there was a balance of $1.57 million. In May, at the time of the election, the General Fund balance was $1.4 million. The projected balance at the end of the fiscal year is $1.3 million. The problem with the projected balance is it does not include any allowance for the Black Castle contract cancellation. The $1.57 million was built up over 18 years by the efforts of several city administrations. The current administration will have taken the General Fund from $1.4 million to effectively $0.0 in one year as a result of cancelling the project.
For the projected Fiscal Year 2019 Budget, the published starting General Fund balance is $1.3 million with projected revenues of $1.313 million. The projected expenses of $1.77 million dollars will result in an end of year balance of $0.85 million. At some time, most likely in the next year, the costs due to cancelling the Black Castle contract will have to be paid. That means there is a high likelihood that the General Fund will go negative during the next fiscal year creating a cash flow dilemma. If the project schedule is negatively impacted due to the Black Castle contract cancellation, projected revenue will be reduced and the deficit even greater. If TWDB funds are not allowed to be used, the budget deficit will increase even more.
Overall the approximate deficit in the 2019 budget for the three large funds; General ($456,000), Blue Hole ($98,000), and Wastewater ($85,000) totals $640,000. Funds to pay the deficits will have to come from somewhere. Mayor and City Council – What is your plan? A member of the City Council has more than once stated “it is not our fault.” When elected, and doubly so when the council cancelled the Black Castle contract, you as council members, have been given and are expected to accept responsibility for this and possibly future budget results.
William Bowman