Council approves flat 2025 budget with 3% COLA

Sep. 21—The Decatur City Council approved this week a "different kind" of $96.1 million budget for fiscal 2025 that's tighter than in previous years.

The flat budget features a 3% cost-of-living raise for employees, fewer capital items and a 10% cut to nonprofit allocations, except for the Best & Brightest Initiative, Decatur Morgan County Tourism, Morgan County E-911 and Decatur Public Library.

The council approved the budget after a series of meetings this week that included a 15-minute presentation by Chief Financial Officer Kyle Demeester on Monday, a Wednesday work session and a called meeting Thursday.

After giving unanimous consent to immediately consider the proposed budget, the council voted 4-1 to approve it.

Mayor Tab Bowling, Demeester and Finance Department employees created the "zero-based" budget after meeting separately with department directors.

Bowling said they started the budget process knowing "this year is different," and they worked hard to make sure the city departments are level-funded.

Demeester said they started with a 3% cost-of-living raise and then funded the city's operational needs.

The budget features a projected 5.5% increase in revenues. Demeester said he anticipates sales and use taxes will be flat and stay at $49.8 million in fiscal 2025. He also expects the Simplified Sellers Use Tax (a sales tax on online purchases) will be roughly $300,000 less at $3.2 million.

With the slower economy and local residents holding onto their money, he said he anticipates revenues will show some growth but not as significant as in previous years.

"Some of the revenue trends we're seeing this year made the budget a little more challenging," Demeester said. "It's definitely a tighter budget."

He said CFOs at municipalities throughout the state are reporting lower sales tax revenues, "which is particularly difficult for us because sales taxes make up 50% of our revenues."

"A lot of other places have a little bit more cushion because they receive more property taxes. We don't necessarily have that luxury, but we do a really good job of taking the assets we have and making it work without making too many sacrifices," Demeester added.

Demeester said personnel costs dominate the budget, increasing by 2% to 57% of the budget.

Council President Jacob Ladner said personnel costs are his biggest concern. The city has 559 employees.

"I've been tracking this percentage, and it's not sustainable because it outpaces revenue growth," Ladner said. "It just builds and builds every year."

Demeester replied that neighboring cities like Madison and Huntsville are closer to having 60% of their budgets spent on personnel expenses.

Ladner said he understands the city has to pay employees more so it can stay competitive with those cities and private business.

"Reducing head count while paying better is a real challenge," Ladner said.

Demeester said they cut budgeted overtime by $166,000 for all departments with Parks and Recreation taking the hardest hit.

Bowling said they put the responsibility on department heads to cut overtime.

"We explained to department heads that we know things might arise, but they will have to come to you (the City Council) and justify any additional overtime they might need," Bowling said.

The Decatur Police Department got a 7.34% increase to $1.37 million. This includes $255,680 for training.

Decatur Fire & Rescue will get three additional battalion chiefs in fiscal 2025 with its budget increasing 13% to $1.82 million. It will receive $59,996 for training.

A reduction in expenditures will come from the council's decision not to renew its contract with Red Sage Communications for the Positively Decatur campaign after it ends Dec. 31. Beginning in 2022, the city has paid this public relations firm, founded and owned by Ellen Didier, $14,000 a month, or $168,000 a year.

McMasters said he's fine right now with the decision not to renew Red Sage's contract because of the budget cuts.

"I would like to get Red Sage back at some point when we have the money," McMasters said. "There are a lot of good things going on. Decatur has some good stories, and (Red Sage) did a good job of promoting the city."

Ladner said he plans to bring Red Sage back up for a vote before the contract ends because the One Decatur comprehensive plan mentions marketing the city as a priority.

"I think what they've done has been a success," Ladner said. "And they utilize 12, 13 or 14 people who have experience and creativity with social media experience. I don't think we can hire a team for what they do for less."

Bowling said Red Sage's Positively Decatur campaign got a favorable response when "another firm we hired got a response that was just the opposite." The city hired Big Communications in 2019, and its "A Little Different" campaign received such a negative reaction from city residents that the city canceled the contract.

The council restored the library's full allocation back to $39,768 at the last minute. Library Director Sherry Sakovich told the City Council at Wednesday's work session that a cut from the city would mean a loss of $24,855 in state funding.

Sakovich said the library had 25 employees and is now down to 13. A funding cut would mean more layoffs. She also added that the city can't address this need at midyear because the state makes budget decisions before Oct. 1.

McMasters said he found out that Ladner and councilmen Billy Jackson and Hunter Pepper wanted to restore the library's full allocation right before Thursday's meeting.

"I want to be as equitable as possible," McMasters said. "And 10% is a much bigger hit on the library because its state funding is tied to its local funding." — Budget review

Jackson, who cast his annual vote against the budget, said he thought Demeester did a good job of laying out the budget. However, he said he was unhappy the council didn't hold department directors' reviews as they have in the past.

Jackson, who starts his 28th year on the council in November, said previous councils got more documentation from directors. This helps council members know more about departments, how they're functioning, and what their needs are, he said.

"To me, that's what we're missing," Jackson said. "You can't do that in an hour, two hours or even 10 hours. And am I am trying to say I'm a glutton and I want more meetings? No. But it's necessary and part of our job."

City Council members sit in on the directors' meetings with Finance on departments in which they are liaison.

But Jackson said the problem is the council members don't hear every request and issue from department heads as they did in the past. The public also doesn't hear from directors, he added.

"It wasn't a public forum, but the public could sit in on (budget reviews)," Jackson said of past budget process.

Councilman Carlton McMasters said he can't speak for how past councils did their budget reviews, but he feels comfortable with the current process. The CFO gives the budget to the council early and then he does a private review, he said.

"Honestly, this budget is so streamlined, so operational in nature, and there aren't a lot of capital items," McMasters said. "It's just a very, very plain, operational budget."

Councilman Hunter Pepper, who made the motion for immediate consideration, said he "is super-excited for this budget. People need to get paid, and let's move on our way."

Pepper said he thinks there "was a severe amount of review on the budget." He said there were "all sorts of meetings on the budget" that Jackson could have attended and he chose not to do so.

"Neither do I, but I do my own research, so I already have my questions answered except for things I feel like the public deserves to know," Pepper said. "I think we do enough review (for the public), and what the departments do is fantastic for the city."

Councilman Kyle Pike said he thinks this a good budget in a year that's "definitely different" because of anticipated flat revenues.

"The Finance team, mayor and department heads did a great job coming up with a budget," Pike said. "I'm glad that we have the 3% COLA on the front end, and then budget from there. I understand that causes some cuts, reduction of capital and some other things, but it is important."