Budget reforecast cuts $6.5 million in city revenue
A recent reforecast of this year's Dickinson city budget is projecting about a $6.5 million revenue reduction. City Administrator Shawn Kessel and city staff compiled the reforecast in response to budget impacts caused by the state's slumping oil...
A recent reforecast of this year’s Dickinson city budget is projecting about a $6.5 million revenue reduction.
City Administrator Shawn Kessel and city staff compiled the reforecast in response to budget impacts caused by the state’s slumping oil economy and had been expecting some of the decline.
“Our 2015 budget was actually higher than our approved 2016 budget,” Kessel said.“We anticipated a revenue decrease in 2016 -- not only predicted it, but included it in our budget and approved that. But the precipitous drop has far exceeded anything we expected.”
The total revenue cut is divided among rounded reductions of $1.16 million in the general fund, $2.9 million in the enterprise fund and $2.8 million in sales tax.
Kessel said the city’s main revenue sources typically come from oil dollars and sales tax.
Monies related to oil account for the “most lucrative” stream of funding for the city this year and arrive through a series of related mechanisms, including the $44 million surge fund allocated to the city by the state last year.
Kessel delivered the reforecast to the City Commission with a preface describing the “tsunami” of activity that affected the city and, subsequently, its taxation and revenue streams, through the oil boom years.
In 2008, he said, before the boom touched down in western North Dakota, the full value of all the properties in Dickinson measured at just over $750 million. As of last year, Kessel continued, that value had jumped to $2.8 billion.
“In that timeframe, we were fourth fastest-growing micropolitan (city) in the nation. Then the next year we were the third, then the next two years we were the second,” Kessel said. “When I refer to the growth that’s happened in our community as a tsunami, I think that’s fair. ... I think it also shares the volatility that we try to operate in.”
In the face of that volatility and with revenues on the decline, the reforecast budget had a deficit of about $1.6 million.
To address that deficit, Kessel recommended the city take measures including postponing making purchases and filling open positions.
He also recommended a reduction of skill-based pay among city staff -- a pay scale intended to incentivize staying in city jobs that make use of skills transferable to the oilfield -- by about 25 cents across the board.
The total positive impact of all adjustments aimed at the deficit could recoup about $1.2 million.
Dickinson Mayor Gene Jackson said the balance will be made up by “tweaking the fees on enterprise funds a little bit.”
Jackson said he hadn’t been surprised by anything in the reforecast and believed city staff had handled it well.
Completing the reforecast early in the year was “critical,” he said, as the city is left with about 10 months to make the necessary changes to cope with the revenue reduction.
Even with the prospect of reduced revenues, Jackson said the city’s financial health is in good shape.
“There are a lot of years behind us of being conservative with how the budget was managed, and even with this need to do a reforecast, the overall health of the budget is very strong,” he said.