SANGER – Facing a significant operational deficit in its general fund, the city of Sanger has had to weigh council priorities against the cost of certain services and projects.
At a public hearing on June 17, city administration presented a preliminary budget to the Sanger City Council that includes $4.4 million more in expenses than in revenues within the general fund alone. The budget for fiscal year 2025-26 is reflective of the city’s need to upgrade vital infrastructure, support future growth and continue to serve residents at a high level, City Manager Nathan Olson said.
While council members and the public have expressed concerns about the deficit, Olson has remained confident that the city is in a stable position.
“I just want to reiterate, this is a good budget as far as I’m concerned; I think it represents the needs of the community and our residents,” Olson said.
A working deficit
A key word in the budget discussion is “operational.” Sanger’s operating budget, meaning the money it spends and receives in a single year, is in a deficit; however, the city is not spending more than it has overall. Thanks to money saved up in the general fund, as well as the enterprise funds for water and sewer, Sanger will still finish fiscal year 2025-26 with positive account balances.
“If you look at the deficit from this proposed budget over the last two years, we’re actually putting money back into the general fund by over $800,000,” Olson said. “So we’re definitely moving in the right direction. … Deficits are deficits, but we’re still in better shape than we were.”
City staff originally thought they would finish out fiscal year 2024-25, which ends on June 30, with an operating general fund deficit of more than $6.9 million. Although expenses will still come in higher than revenues, the city is projecting that the deficit will be a smaller figure, at $1.8 million.
Assistant City Manager Michelle Speer said this was because the city will bring in nearly $1.5 million more in revenue than it had initially predicted when it reviewed the budget at the mid-year point. Additionally, expenses for fiscal year 2024-25 will be lower than originally thought by more than $3 million, largely due to a decrease in capital improvement project allocations.
“Sometimes we budget for projects but the timeline either doesn’t work or something happens and it just doesn’t get finished on time,” Speer said. “When you budget for a capital project like all of it’s going to be spent all at once, and then the project never happens, it looks like we’ve inflated our expenditures, and it’s because we had all intentions of getting it finished and it just didn’t.”
General fund proposal
Speer presented highlights from the proposed budget to the council, which includes nearly $23.2 million in general fund expenses and just under $18.8 million in revenues. The general fund balance by the end of the fiscal year, on June 30, 2026, is expected to be approximately $6.6 million.
Within the proposed general fund expenses, personnel costs make up more than half of the budget, totaling $14.2 million. This is an increase of nearly $1.5 million from the previous year, primarily due to already negotiated pay increases, as well as increased insurance and retirement benefit costs. Speer noted that the budget includes just one more full-time position within the public works department.
Split among departments, nearly two-thirds of general fund expenses are directed toward public safety, with $7.8 million going toward the police department and $7 million going toward fire and emergency services. The public works department takes up the next largest share at 19%, with nearly a $4.3 million budget. Recreation services are budgeted to spend about $850,000, or 4% of the total general fund budget.
Operating deficits are also expected for the sewer, water and disposal enterprise funds, which manage the city’s utility and garbage services.
The sewer fund is budgeted to have approximately $6.1 million in revenues and $8.9 million in expenses, a $2.7 million deficit. By the end of the fiscal year, the fund will have a balance of about $3 million. Most of the deficit in the sewer fund can be attributed to capital improvement projects necessary to solve issues with the wastewater treatment plant.
The water fund is budgeted to have $4.7 million in revenue and just over $6 million in expenses, resulting in an operating deficit of about $1.2 million. There will still be more than $7.6 million in the fund by the end of the fiscal year.
Within the disposal fund, the city is anticipating a small operating deficit of $33,000. Thanks to increased trash rates approved by the council in March, the disposal fund will make up for that deficit with a positive operating fund by fiscal year 2026-27.
Council requests
In order to keep the operating deficit as low as possible within the general fund, city staff looked for ways to un-allocate funding for stagnant projects and programs and cut back in other areas. Although council members agreed with some of the changes, they did ask city staff to revert two changes that will increase the expenses coming from the general fund in the final budget.
This included the proposed “freezing” of one police officer position and the removal of the newsletter the city mails to residents with their utility bills. Staff explained that, with the police officer position, they would not allocate funding this year until they could be certain the position would be filled.
Both Olson and newly-sworn in Police Chief John Reynolds said that the department is constantly working to fill between five to seven positions, and it is unlikely that it would become fully staffed in the fiscal year. Still, Councilmember Michael Montelongo said that public safety is a priority of his, and he does not want to see the position unfunded, regardless of if it could come back to the council to be reallocated.
“We’re freezing public safety, and I’m not for that,” Montelongo said. “I know you could come back to us, but I’m just afraid it’s never going to come back. And I am not for freezing any bodies in public safety to jeopardize the safety of this community.”
Through a consensus vote, the council requested that staff include funding for the position in the final budget. They also requested staff add back in funding for the city newsletter, which costs about $24,000 annually to print and distribute.
Overall, council members thanked the city administration for their work putting together a challenging budget, but said they would have liked to see the proposal come before them and the public sooner. Further, they said they felt that some items, like the proposed freeze on a police officer position, were not presented to them as transparently as they could have been.
City staff plan to bring back the final proposed budget with council’s requested amendments at a special meeting scheduled for 6 p.m. on June 27.
