With significant capital improvement purchases and facility maintenance upgrades looming on the horizon, the city of Watertown is keeping a watchful eye on how and when those situations will need to be addressed financially.
In 2013, the city is operating for the first time with a new Capital Improvement Plan (CIP), a plan that is designed to help city officials better recognize when certain major purchases will need to be made in the future in order to both budget accordingly and provide cash on hand to help with those purchases or maintenance.
“This initial plan is a first working draft for the city that will become more complex into the future,” Watertown City Administrator Luke Fischer said. “This initial draft that the council approved is a snapshot of known needs today. Our next plan will be much more elaborate and do a better job charting equipment life cycles and needs related to those life cycles in the future.”
In the first year, the CIP is budgeted to receive $132,250 from the city’s general fund, with other funding coming from appropriate funds as it relates to a specific project, such as the building fund, park fund, water fund, sanitary fund and storm fund. In all, the CIP accounts for $288,750 in expenses in 2013.
However, as the city faces more significant expenditures in the coming years, the amount of funding needed will increase dramatically, one of the major reasons the council felt a need to develop a plan ahead of time to strategically chart out those expenses. The initial CIP calls for $347,500 in general levy support in 2014, at least $220,000 in both 2015 and 2016, and $348,750 in 2017.
The city tentatively expects to receive $173,000 in Local Government Aid this year, which would be the first time in years Watertown has received any amount of LGA. Fischer said the tentative plan moving forward is to use a large chunk of any LGA the city receives this year or in any future year to help fund capital improvements and lessen that burden on the general tax levy. However, Fischer said the city council recognizes that LGA is not a reliable revenue stream — as evidenced by the past several years — and that’s a major reason why the council wanted to develop a CIP.
“This is the first time in while the city is expecting to get Local Government Aid,” Fischer said. “We’re happy that we have that revenue stream because it helps keep our taxes low, but it’s also something we know is subject to decisions made in St. Paul.
“We’re slated to receive $173,000 in Local Government Aid this year. So far there are not any indications from the legislature that would unalot that, which has happened in the past. But as a city, we recognize that is not a stable, long-range funding source.”
The city’s capital and maintenance needs in the coming years are plentiful. To start with, the city’s 1986 loader — used for snow removal downtown, various projects in parks, and street repairs — is nearing the end of its life cycle and will need to be replaced. In large part because of the lack of a previous CIP, the city didn’t have cash on hand this year to make initial payments on that purchase, but got around the issue by purchasing a much cheaper snow blower that the city will use for snow removal downtown in the meantime.
However, that loader, at a total cost of roughly $150,000 — $30,000 per year over a 5-year period — still needs to purchased in the near future, and the hope is that the CIP will help free up cash to pay for that item by the time it is needed.
Other items included in the CIP in the next several years include the replacement of a 1985 plow truck, a lawn mower for the community park, the replacement of several of the city’s older pickup trucks, playground improvements at Highland Park, and a number of maintenance issues, such as an HVAC system at city hall that will need to be replaced at a cost of $60,000 to $100,000. Fischer said the CIP also includes typical annual street and sidewalk repairs and maintenance like seal coating, and said facility maintenance makes up a large chunk of the items identified in the CIP.
“That’s an important chart for us to understand what type of building needs we’re going to have in the future,” Fischer said.
Contact Matt Bunke at firstname.lastname@example.org