Finance committee flags $450K drop in interest revenue; fund balance expected to cover gap

The Finance & Budget Committee opened its review by flagging a sizable projected decline in interest earnings that staff say could reduce general fund revenue by about $450,000. Chair (S1) asked how the administration plans to make up the difference: "according to the budget here it's $450,000 that we're thinking that we're gonna lose in that that thing," the chair said.

Finance staff (Kelly, S3) responded that the city diversifies investments and has drawn down a borrowed deposit in the recent period: "We do diversify ... we have that, $20,000,000 deposit for that, from Ehlers from our borrowing," Kelly said, adding that the department has reduced reliance on volatile interest income and budgeted conservatively in case rates remain low. Finance staff also noted a projected fund balance around the mid‑20% range; staff characterized the current 26% as above minimum policy levels but said the balance will fluctuate with capital spending and transfers.

Committee members pressed staff on whether the interest falloff is a one‑time timing issue or an ongoing structural change; staff said some of the drop reflects the end of a large deposit and lower market rates, and that other revenue drivers—such as a recently confirmed $200,000 increase in state transportation aid—help offset portions of the gap. The committee agreed to send the reviewed budget to the full council with staff revisions and clarified assumptions.