A contingency figure left out of the Town of Normal budget for the past three years has been reintroduced.
The Town Council approved the $136.5 million spending plan for the 2020-21 fiscal year during a lengthy meeting Monday that also included a vote in favor of a 2% increase in water rates.
City manager Pam Reece said the $550,000 general expense figure in the budget will allow the town to address unexpected circumstances.
“We have it available during the fiscal year in case something unforeseen happens and we need funds,” she said. “Maybe an opportunity presents itself and the town decides it wants to take advantage of that opportunity, so then we can dip into funds in that particular line item.”
As an example Reece said the funds could go toward unfunded capital projects such as improving a park, possibly used as the required matching dollars if the state offered a grant opportunity.
Reece said the town previously dedicated anywhere from $450,000-$750,000 as a contingency amount, but budget cuts eliminated the item beginning in 2017. She said the town’s improved fiscal situation made it the right time to bring the contingency back.
“We've hit our fund balance targets. We’ve got our general fund reserves where we want them,” she said. “Our revenue expectations are pretty much where we predicted, and so we're in a strong financial position.”
Council member Stan Nord, who cast the lone vote against the budget, said he would rather have the contingency funds put in reserves instead of being a general expense.
“I’m just of the mindset that the harder it is to access that money, the harder it is for us to spend it,” he said.
Kathleen Lorenz defended the inclusion of the contingency, calling it prudent financial planning and noting the figure represents less than 1% of the entire budget.
“The intention is not to spend it unless (needed),” Lorenz said.
Water Rate Increase
Residents will begin seeing the higher water bills next month with the rate increase taking effect April 1. The average household (figured at 6,000 gallons of consumption) can expect to pay about 90 cents more each month, or a little less than $11 annually.
The new rate will result in an estimated $193,000 of additional revenue for the water fund. Reece said the money will be reinvested directly back into the water system.
While the rate increase only applies to 2020-21, the town has projected an annual 2% increase through the 2024-25 fiscal year as a “planning tool” for the water fund.
“We don’t want to be in a position where come 2022, 2023, 2024 suddenly we’re in some financial distress in that fund,” said Reece. “If that happens, then we would be asking council for a very significant rate increase.”
Council member Scott Preston joined Nord in voting against the increase. Nord said the town didn’t need the rate hike this year, and suggested the extra $190,000 could be transferred from other town funds.
But Reece said that would go against best accounting practices.
“We don’t want to get in the position of moving general fund dollars into a water utility where user charges are supposed to support that utility,” she said.
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