Recently I was able to connect with other city administrators both near Marshall and across the State of Minnesota. One consistent message was the challenge of finding enough revenue to provide services — whether it be providing public safety, maintaining infrastructure like streets or keeping up with the expectations of the public like park and recreation facilities that improve quality of life.

All cities are required to prepare and adopt an annual budget. By law in Minnesota, the fiscal year of a city and all its funds must be the calendar year. Thus, for cities, a budget is one year of estimated money coming in (revenue) and money going out (expenditures). In order to balance the budget, total estimated revenues must be equal to or exceed total estimated expenditures. Yet, since the budget is based on estimates, the budget is intended to be a flexible document that factors in some contingency to plan for the unexpected.

The city of Marshall has recently begun its budget process, which concludes with adoption of a final property tax levy in December of each year with the amount of the levy based on the budget.

The largest individual segment of the city’s budgeted operations is the general fund, which covers services like police and fire operations, streets, engineering, community planning, zoning and all administrative support services. These activities are funded by four major general fund revenue sources: intergovernmental revenue like local government aid, licenses and fees, grants, and property tax. While property taxes are not the most accepted generally by the public, this tax provides a stable source of revenue for cities while other revenue sources decline or remain largely flat.

During the budgeting process, cities examine all services and programs, such as, determining the level police and fire services to provide, ensuring compliance with wastewater regulations, continuing quality park and recreation programs, upkeep in street park maintenance, snowplowing response and any other city-funded activities. In addition, the city must ensure the budget includes building and grounds costs, fuel costs, and equipment purchases and maintenance. Like most cities, the city of Marshall’s largest budget impacts are personnel costs, that include salary and benefits. But with competition for employees, especially in public safety, salary and benefits are key to being successful in recruitment and retention.

Another budget area is planning for future infrastructure costs. This is essential, because without it, cities run the risk of costly emergency repairs or failure to provide services at the greatest time of need. Cities often budget and plan separately for capital improvements because the process covers more than one year. Capital improvements include replacing, repairing and maintaining infrastructure such as streets, sidewalks, streets, water and sewer systems, buildings and parks. These types of infrastructure items have seen dramatic increases in cost in the last decade which ultimately add to the city’s budget pressures.

Enterprise funds come from city operations run in a manner similar to private businesses. For the city of Marshall these enterprise funds are stormwater, wastewater and our municipal liquor store. These services are typically funded by charging those who use the service. While these funds typically don’t affect the property tax levy, they must have annual budgeted revenues and expenditures to ensure that necessary income maintains the future success of those operations.

In addition to the general fund, the city’s budget for its remaining governmental funds is specific to designated revenue sources and the restricted activities and services provided by those funds. For example, sales tax revenue from food beverage and lodging must be utilized for operations of the MERIT Center and the Red Baron Areana and Expo Center. Airport funds, from the state of federal government, must be directed only to the airport. This segregation of funds by revenue source is required by the Governmental Accounting Standards Board (GASB), which establishes accounting and financial reporting standards for state and local governments.

The budget sets out the city’s yearly plan to maintain vital services in a financially sound and prudent manner. At the same time, all cities are trying to balance the demands from residents to not raise taxes, yet meet the public’s expectations of an enriched, safe, quality of life.

— Sharon Hanson is the city administrator for the city of Marshall