Sidney council grapples mil levy

Sidney’s city council members continue to wrestle with funding concerns in preparation for setting its mil levy.

At its regular meeting Tuesday, as council prepared to set its property tax levy, discussion turned to a couple of items of uncertainty remaining in the budget and how those items might affect the city’s ability to meet its obligations under different scenarios.

The biggest of those challenges is the question of upcoming bond needs. The city is preparing to seek bonds against up to $14.1 million of debt for roads and other projects. The immediate need is about $6 million, but the amount is less important than the city’s bond rating, which will affect interest rates.

The city is in the process of getting a review to see what its bond rating might be, but that process will continue to be in the works until after the city is required by the state to set its mil levy.

As a result, Sidney City Manager Ed Sadler presented council with best-case, worst case scenarios to set the levy for bonded indebtedness, ranging from a need of nearly $559,000 down to $716,000 to be funded from tax dollars.

“I know this is difficult,” Sadler said. “You’re being asked to set a levy on a bond you haven’t seen yet.”

Due to the uncertainty, council revisited a few items from its budget session two weeks ago, looking for potential expenditures that could be put on hold to give a little more breathing room as it looks at the budget.

One of those items was $141,000 budgeted for an addition to the street department shop. That need, which had been budgeted and delayed last year (current budget cycle), may have to be delayed again.

Another was $55,000 for work in the parks department, one of the areas council had set as a priority when it set goals earlier this year.

“We just want to be prudent when it comes to managing the funds,” Mayor Mark Nienhueser said.

Council also debated at length the amount, or if, it budgeted for cash reserves.

Nienhueser said it made him uncomfortable to be setting sums of money aside for reserves, considering how tight the local economy is and how that might affect taxpayers.

Others agreed, but Sadler reminded council how not having adequate cash reserves affects the city, particularly when it comes to the current process of bond rating.

“In general, bond companies want to see up to 25 percent of the operating budget in a cash reserve,” Sadler said. He went on to explain that bonding companies see that as financial strength of an entity and shows a certain amount of preparedness its ability to pay its bills.

To get a better handle on where it might make prudent moves for a little more certain mil levy, council asked Sadler to make adjustments to budget items discussed. With deadlines looming for the mil levy to go through legal requirements, council will meet again in a special session at noon at city hall Sept. 1.