The City of Newcastle just completed its annual budgeting process for fiscal year 2023-24 which begins on July 1, 2023. City Manager Kevin Self reports that the City experienced significant gains in revenue, but also significant increases in costs due to inflation.
Be c aus e of nationwide factors in city gove r nme n t , Self said a conservative approach was again taken for this year’s budget, while setting priorities and recognizing the needs and services for Newcastle’s residents.
Estimated revenues for Fiscal Year 2023-24 are $22,558,935.56 while estimated expenses are $17,917,838.76. Total estimated resources, which include prior year reserves held because of several high-dollar City projects, is $40,481,878.
In a letter to the City Council, Self states the following: “The objective of the budget is to prioritize operational needs and allocate funds from the various revenue resources to meet those needs. As City Manager I am tasked with creating and proposing an annual financial business plan to the City Council.
“The financial plan presented for the 2023-2024 fiscal year contains detailed information related to estimated revenues and proposed expenditures for salaries and benefits, operations, and capital purchases for all departments, as well as other funds maintained by the City of Newcastle. Presenting the budget in an all-inclusive format provides the Council and citizens with a thorough and transparent view of the City’s
BUDGET on page 3 overall financial position. This format also delineates projected revenue sources and how the city plans to utilize those sources.
“The City of Newcastle experienced a thriving and healthy fiscal year 2022-2023 overall in terms of revenue. Sales and use tax revenue exceeded expectations. The city ended FY 2022-2023 with an approximate increase of 6.83-percent in tax revenue over FY 2021-2022. However, other factors presented challenges in daily operations. Inflationary pressure impacted operational costs overall with specific areas such as fuel, materials for roads, and parts for water projects having the highest increases. Continuing supply shortages for essential parts and equipment caused operational disruptions in several departments.
Personnel recruitment and retention remained the primary focus of FY 22/23. The City Council adopted a classification and step pay plan for employees in August 2022 creating parity in personnel positions with other cities similar in size. The crucial decision to implement a structured pay plan brought needed relief to staffing concerns. Much was accomplished in the areas of capital expenditures, projects, and planning during FY 22/23.
“Capital expenditures included vehicle purchases for several departments using ARPA funds received during 21/22. Multiple road projects were completed during FY 22/23 using funds derived from the half-cent sales tax. The city’s water system including storage towers, clearwell, and water plant received much needed upgrades and repairs meeting or exceeding DEQ compliance requirements. Loans were secured during FY 22/23 as construction began on the new fire station and animal shelter. Strategic financial planning for these two projects prevents a negative debt service impact to fund balances. Planning for the future growth and security of Newcastle continued with entering contractual agreements to update the city’s comprehensive plan and create a new water and wastewater modeling masterplan.
“Creation of the FY 20232024 budget began in March 2023. Budget forecasts have been made using past trends and realistic projections. However, 2023-2024 revenue projections are weighted toward realized revenues during FY 2022-2023.
“Working together as a team, management and financial staff met with each department head to determine personnel, operational, and equipment needs in each department. The 2023-2024 budget has been prepared with a focus on maintaining and/or slightly increasing staffing levels, and operational readiness. Operational budgets for all departments have increased for 2023-2024 due to continued inflation. To maintain deficit control, capital purchases have been temporarily suspended but may be reconsidered as the 20232024 budget progresses.
“It is imperative the City maintains adequate reserve funds to mitigate current and future risks. While reserve fund levels vary from city to city, Newcastle’s accounting firm recommends a reserve fund balance between 15 and 25 percent to mitigate unexpected events. Newcastle’s budgeting team has labored to create and maintain an operationally balanced budget equaling recurring revenue with recurring expenditures in the proposed budget. The City’s conservative approach to all components of the budgeting process has proven to be successful year after year.
“The ebb and flow of the Nation’s economy requires constant monitoring of potential impacts to the City of Newcastle. Nationally, municipalities are still coping with high unemployment, business closures, and revenue shortfalls. However, the future of Newcastle appears bright. Maintaining a conservative approach toward the budget process is conducive to a healthy fund balance and assists the city in its defense against unexpected events.
This budget presented before the City Council and the community recognizes the critical needs and services citizens of Newcastle deserve and expect. While it is financially impossible to address every area of community concern, priorities must be set and funded. The proposed 2023-2024 budget addresses established priorities based on the funding available. Consultation and planning with department directors contributed heavily to the assessment of needs and creation of the budget document.
“It is the objective of this budget to address multiple priorities of the community, improve cost effectiveness, improve efficiency, and to prudently manage the taxpayer’s resources through a commitment to stewardship, and a continuous improvement of services provided.”
The City Council held its annual special joint meeting of the Newcastle City Council and the Newcastle Public Works Authority on the budget May 15. Self provided fund balances, the budget summary, and along with the Council discussed budgeted projects, grants, other revenues and investment of reserves. No action was taken. In the June 12 regular meeting, the City Council formally approved the City’s 2023-24 budget.
