The Newport Board of Commissioners approved the next fiscal year’s city budget at two special meetings Thursday and Friday of last week.
The budget numbers and projections show an overall revenue increase and a continued building up of the city’s reserves, which city staff touted as a benefit of a self-described fiscally conservative approach to money management.
“I think the board should be pleased with the results,” said City Manager Thomas Fromme.
Fromme gave a presentation on the proposed budget for fiscal year 2024, which begins July 1. During his presentation, he broke down different aspects of the budget, talked about the history of the city’s finances, including the economic downturn of the pandemic, and described the city’s conservative rationale.
“We were [too] aggressive years ago in our projections, and oftentimes they would never meet that projection,” Fromme said. “So we have gone the other way over the last 15 or so years, and we use a very conservative approach, which has served us well.”
This approach, Fromme argued, allowed the city to build up its reserves. The city finance department projects a balance of about $11.6 million in reserves next fiscal year, Fromme said.
“The auditors recommend we have a minimum of six months in our fund balance as reserves,” Fromme said. “So, we’re getting there. We’re a little over five months now.”
“Reserves are critical for our future success,” Fromme said later on in his presentation. “There is going to be another downturn at some point… There’s going to be shortfalls that occur and we lose a big employer, which we’ve lost a lot of them over the years. So we had to be prepared for it.”
Fromme then moved on to revenue and expenditure counts.
License fees, a budgeting category that includes taxes collected on payroll, are the largest revenue source for the city, taking up about 66% of the total budget according to the finance department’s most recent numbers. Property taxes are in a distant second, taking up only about 14% of the budget.
“I can’t reiterate this enough,” Fromme said. “Payroll is our bread and butter.”
Although revenues from payroll taxes dipped a bit during the pandemic, they jumped back up again between fiscal years 2021 and 2022, which Fromme attributed to local employees returning to the office to work in Newport rather than from home.
Mayor Tom Guidugli Jr. thanked Fromme for diligently collecting taxes from large employers throughout the economic downturn.
“I think that’s important to note,” Guidugli said. “I was just at [Kentucky League of Cities] meeting, and it was actually discussed. In many cities it left a gaping hole in their budget, and the way that we’ve pursued and actively engaged these companies and ensured that they paid has stabilized and prevented our loss of revenue–which is still great–from being as great as it could have otherwise been.”
Most of the expenses associated with the budget were for people’s salaries, particularly pay for public safety officials like police officers and firefighters, which took up just over half of the expense budget. Fromme said that measure was consistent with previous budget years.
Members of the board complimented the city staff’s approach.
“It’s conservative on revenue, but it’s conservative on expenditures as well,” said Commissioner Julie Smith-Morrow. “And I think that shows great care and careful planning.”
“Fantastic job on the budget; fantastic job of managing the monies,” said Commissioner Ken Rechtin.
The commission voted unanimously to enact the fiscal year 2024 draft budget on June 16.
Note: The city of Newport uses an online budgeting portal to show its budget information freely to residents. Per a conversation with the city finance department, the figures displayed online are not up to date due to technical issues, and the numbers presented to the board last week are more accurate. The city plans on publishing a complete budget book for the city’s upcoming fiscal year on its website by the end of the week.
The next Newport Board of Commission meeting on July 24 at 7 p.m. at the Newport City Building on Monmouth Street.