Entering the 2020 fiscal year, the city of Derby stood on solid ground, financially speaking.
Once the pandemic hit in March, that financial picture got a little cloudier, but as Director of Finance Jean Epperson reported at the city council’s March 23 meeting, its preparedness paid off.
“We ended 2020 in excellent shape,” Epperson said. “We feared revenue shortfalls of $1.6 million, but that did not happen.”
In the end, the city’s expenses came in $1 million lower than the revised budget while revenue was $1.2 million more than projected. Interest taxes, property taxes and sales tax/building fees all brought in revenue increases for the city over the past year.
Epperson noted property and county sales tax continue to be the biggest revenue earners for the city, with taxes from the hospital (an uncertainty heading into 2020) playing a part in the city coming out ahead.
Derby’s growth and increasing assessed valuation helped it capture more revenue from the countywide sales tax (which is based partially on population) in 2020 as well, increasing by 3.68 percent in the past year.
Additionally, the city’s own half-cent sales tax (split among the library, fire and park department) grew by 4.6 percent in 2020. With the city remaining under its debt management limit of 20 percent (currently at 17.93 percent) as well, council members credited the work done by city staff to come out ahead through an unpredictable year.
“My take is if you always prepare for the worst then you’re pleasantly surprised so I really approve of you being very conservative and taking the steps you did to keep us in good financial shape,” council member Andrew Swindle said.
Looking ahead, Epperson did note there are some challenges on the horizon, like continued street maintenance efforts in Derby, major wastewater and water improvements, etc. On top of that, preparing for the 2020 budget the city’s five-year plan shows Derby in the red in 2024 and beyond. Epperson stated she hopes to come back with more “in the black numbers” as the current year’s budgeting process continues.
Having also received $720,524 in CARES Act funding to help offset $1.3 million in budget cuts in 2020, council member Rocky Cornejo asked if any of that went toward items cut in those cost-saving efforts. Due to stipulations, Epperson said those funds were primarily used for public safety salaries.
Questions were also raised about the next round of funding from the American Rescue Plan and how that would be factored into future budgets. Epperson did state it is her understanding those funds would not need to be paid back, while city staff are waiting on clarification of spending parameters before earmarking those funds for any future projects. The positive is that there is no impending deadline that will require quick spending as with previous funds.
Especially with the challenges and uncertainties on the horizon, Sexton and Mayor Randy White credited the work of city staff to turn 2020 into a positive from a financial standpoint. With the debt being maintained and healthy cash balances, it gives the city time to prepare for any obstacles that may arise.
“That’s good. It just means we’re in good cash position,” Sexton said, “and in uncertain times you want to be in good cash position.”