McComb selectmen discussed this week the ramifications of being required to have a balanced or surplus budget.
City Administrator David Myers talked about that very issue at a public hearing Tuesday for the 2022-23 McComb budget set to take effect Oct. 1. The board is expected to vote on a finalized budget for the upcoming fiscal year at its Sept. 13 meeting.
“The law says the municipality cannot have a deficit budget,” he said. “When you have a budget, you can show a surplus budget or a balanced budget. That’s what we’re showing now, a balanced budget.”
Myers said the budget is based on expected expenses.
“It’s a projection for the city of McComb’s fiscal year,” he said. “We bring forth a balanced budget.”
Myers previously presented a 2022-23 budget of $11.986 million at a workshop last week and noted the 2021-22 budget was $11.646 million. His proposal comes without any tax increases.
Selectman Tommy McKenzie questioned what would happen if unexpected expenses occur.
“So there’s no balance anywhere that will take care of anything that may pop up?” McKenzie said. “We’re spending the capital improvement fund just to pay bills?”
“Well, Selectman McKenzie, what we do is we have to show that the revenue is coming and we have to show it being spent,” Myers replied. “Not necessarily spending, but show it being spent. So, to answer your question, there’s always an end fund balance, always.”
Myers said all revenue has to be shown in the budget.
“I guess a better way for me to ask my question is, if something major breaks at the wastewater treatment plant and it costs $750,000, do we have to borrow money?” McKenzie said. “Because we don’t have any money to pay it here on this.”
“That would be correct,” Myers replied.
Selectman Bruce Mullins suggested another option.
“Do we have a rainy day fund or something like that?” he said.
Myers said he does not know any municipal governments in Mississippi that have a rainy day fund.
“I would say if this board wanted to do that, I think that would be done through an ordinance,” he said.
Myers again talked about how a budget that is balanced or has a surplus must be passed.
“We don’t literally spend every dime that we get in, but we have to show it being spent because it’s revenue versus expenditures and we don’t just keep taxpayers money on hand,” he said.
McKenzie once again looked for clarification.
“That’s the concept I don’t understand,” he said. “I would have thought the budget is what we think we’re going to spend on those line items and, if we have money left over, it goes to an end fund balance to carry forward to the next year.”
McKenzie asked Myers, if the city spends less money than it said it would in the budget for something, could the funds be used somewhere else?
“We do that,” Myers replied.
McKenzie said there needs to be a regular report of expenditures if that is the way Myers is doing the budget.
“I’ve just got to learn how you do this,” said McKenzie to Myers.
Myers said each department has its own budget and spends the money accordingly.
“We’re showing revenue,” McKenzie said. “We’re showing we’re spending every dime of it is what I’m looking at. Period. I have no clue if there’s $1 left over or $500,000 or $1 million.” Myers said there would not be a negative balance in any department’s budget at the end of the current fiscal year.
“At the end of the fiscal year, we have to do a budget amendment to make sure there’s no account that has a negative balance,” he said.
Mayor Quordiniah Lockley said the budget amendment would come before Oct. 1.
“You’ll do that at the last board meeting in September or a special called meeting before Oct. 1 where you have to approve your end of the year budget amendment,” he said. “Those budget amendments will make sure those categories, none of them are in the red.”
Although the budget is expected to be balanced at the end of the current fiscal year, Myers said not all of the money will be spent before October. It could be used during the 2022-23 fiscal year.
“We use that as our reserves because the tax collectors are slow in the first quarter of the fiscal year,” he said.
