Manhattan city staff members have changed their approach to the 2025 budget after commissioners last month indicated they would not support the proposed $2 million reductions that primarily would consist of personnel cuts.
At Tuesday’s city commission meeting, officials suggested two one-time injections of funds to replenish the city’s cash balance as commissioners continued deliberating ways to reduce expenditures and increase the general fund for 2025 and beyond.
The proposal involves using $4 million in American Rescue Plan Act funds and $1.5 million in transient guest tax funds along with the generation of an estimated $3.7 million from a mill levy increase to bring the city’s expected 2025 revenues to $46.8 million. The city’s expected 2025 expenditures are set at $39.8 million.
Without the additional American Rescue Plan Act and transient guest tax funds, the city’s actual cash balance would fall to around $7 million in 2025 and $3.5 million in 2026. City officials’ goal is to keep at least $10 million in reserve funds. Interim city manager Jason Hilgers said the general fund’s cash balance is important because it’s what rating agencies focus on when evaluating the city’s financial standing and creditworthiness.
City staffers and commissioners have been considering a range of strategies to address the city’s budget issues, including personnel reductions, increasing cost recovery, finding operational efficiencies and utilizing alternative funding sources where possible. The city has tried to generate some personal savings by leaving open positions unfilled, but commissioners couldn’t agree on whether to provide a 3% cost-of-living adjustments to remaining employees.
“I think ideally we want everyone to be paid,” commissioner Jayme Minton said. “We don’t want any open positions. We want everything filled. And the reality is that’s just not where we’re at with our revenues.”
City department heads also shared with the commission their 2023 actual expenditures, 2024 projected costs and 2025 budgets. Commissioner John Matta said the current circumstances made the prospect of boosting the funds given to external organizations unfeasible.
“I’m not going to be popular with this, but I don’t think we can increase any outside agency given our budget situation,” Matta said. “We have to figure out how to use it to offset our costs and that goes across the board.”
City commissioners didn’t vote at the meeting, because it was a work session.
The commission will meet again Tuesday to finalize a total budget and mill levy rate. Community members later will have the opportunity to voice their opinions before the commission formally adopts the 2025 budget in September.
