City of Mitchell, SD, to consider keeping freeze on capital projects

Mitchell’s mayor and finance officer are awaiting year-end financial numbers to determine whether a freeze on some city government expenditures will be retained or lifted.

Last Monday evening, an ordinance was proposed to the City Council that would carry over about $6.6 million worth of budgeted but unspent 2009 appropriations to the current year. Included in that ordinance is about $500,000 worth of expenditures that were put on hold last year due to concerns about the economic recession’s impact on sales-tax revenue.

The frozen expenditures are for capital items such as equipment and structures. Each of the items was categorized by a department head as something that could be postponed to a future year.

Whether those postponed 2009 expenditures will be reauthorized in 2010 is something that’s under evaluation, said Finance Officer Marilyn Wilson.

“I’m waiting for final numbers on 2009 to see where our cash balance ended up,” she said Wednesday.

The city’s 2009 sales-tax collections are taking longer to calculate because of a taxpayer error that was discovered recently. The taxpayer overreported $145,000 during the past several years, so the city’s collections now have to be amended and the $145,000 has to be paid back.

The city’s 2009 budget included a projected $9.26 million in revenue from the city’s 2 percent sales tax, which would be a slight increase over the 2008 sales-tax collection. Wilson speculated Wednesday that the city’s sales-tax collections for 2009 might not meet those earlier expectations.

“We had a slight increase going into December, before we were notified of the overpayment,” Wilson said. “So I’m assuming — and this is just an assumption — that we’re going to have a slight decrease.”

City Councilman Doug Backlund said at Monday’s City Council meeting that the council should not carry over the unspent 2009 appropriations to 2010. He said the appropriations were budgeted before economic conditions deteriorated, and each appropriation should therefore be considered anew rather than carried over to a new budget year.

The other City Council members in attendance disagreed, and the first reading of the ordinance containing the re-appropriations was approved on a 6-1 vote.

Besides the $500,000 in frozen 2009 capital expenditures, the $6.6 million ordinance contains many large projects that were either postponed, or were completed and are being paid for this year. Examples include $2.251 million for a water tower that is scheduled to be erected along Interstate 90, $263,000 for a major lift station that was installed on Foster Street last year, and $929,000 for an airport runway reconstruction project that was completed last year.

“It’s pretty normal for projects to be done over multiple years,” Wilson said. “It just happened that we have several large-dollar projects from 2009 that are being carried over.”

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