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City council approves preliminary budget

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The Roswell City Council approved the $37.7 million preliminary fiscal year 2022 city budget with no discussion Thursday evening after city officials said they miscalculated the amount to hold in reserve.

The city must submit its preliminary budget to the state by June 1. Although approval by the city council is not required until the final budget is presented in July, City Manager Joe Neeb said he wanted the council’s support for it.

“We would like to have a preliminary budget approved by this council because we believe that is one of the most important things you do every year is to determine exactly how much of the taxpayers’ money that we are going to spend on anything,” he said at a special meeting of the council Thursday.

The resolution to approve the preliminary budget passed by a vote of 8-1. Councilor Juan Oropesa was the dissenting vote. Councilor George Peterson was absent.

When Neeb introduced the budget for the first time publicly at the May 6 Finance Committee meeting, he said it would include enough funds in reserve to cover four months’ worth of the city’s expenses. That amount was listed in the budget as $9.4 million.

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Last year, uncertain of how the pandemic would affect gross receipts taxes and other revenue sources, the city budgeted for three months’ reserve. The state requires one month.

The four-month reserve became a point of contention at a May 20 special meeting to consider approving the budget. Oropesa, Peterson and Councilor Margaret Kennard all said a smaller reserve amount would be better, with the extra funds used for city services such as roads, building restrooms at the splash pads or assisting families with admission fees at the Spring River Zoo or Roswell Museum and Art Center.

However, Neeb and Juan Fuentes, administrative services director, explained Thursday the $9.4 million in the budget is actually a three-month reserve. City staff made a miscalculation.

“We took our expenses and divided by four because we were looking for four-twelfths. With 12 months in the year, that created a three-twelfths number. In order to get a four-twelfths number, you need to do a division of three,” Neeb said.

Fuentes and Neeb said if the council decides to increase the reserve to four-twelfths — about $12.6 million — the city will have the funds to do so.

“We have seen a very solid trend for the general fund in the city. Financially we have a healthy reserve in the general fund,” Fuentes said.

Fuentes presented a chart showing the city’s fiscal year 2021 general fund cash balance. At the end of the first quarter in September, the city had a cash balance of just over $12 million. That grew to over $22 million at the end of the third quarter in March. As of April 24, the cash balance was just over $21 million.

With the end of the current fiscal year on June 30, Neeb said the final figures of cash balances in city departments should be available after July 11. The final budget can then be prepared and presented to the council, and at that time, a change in the reserve could be made.

“What we will do for the final budget, we will operate through the amendment process in order to adjust anything in that budget,” Neeb said.

The council can make adjustments to the budget after it is passed as well, and often does when unexpected revenue or expenses come up.

Some known revenue that will come to the city later was not included in the budget because not enough information is known about it, Neeb and Mayor Dennis Kintigh told councilors at the May 20 meeting.

Neeb said the city will receive about $11.1 million from the American Rescue Plan Act of 2021, the federal COVID-19 relief act passed in March.

New Mexico cities are also slated to begin receiving sales tax the state has collected for two years from internet sales. Roswell should start to see that revenue by September, Kintigh said.

Once more information is known about those sources, they can be included in the budget through the amendment process as well.

City/RISD reporter Juno Ogle can be reached at 575-622-7710, ext. 205, or reporter04@rdrnews.com.

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