By John Dobberstein, Editor
A proposed $456 million budget was unveiled this week for the city of Broken Arrow that largely holds the line on operating expenses as city officials battle with public safety expenses, inflation, supply chain issues and other challenges.
City Manager Michael Spurgeon said that in spite of a slowdown in sales and use-tax revenue this year, Broken Arrow’s fiscal health remains “very stable.”
Spurgeon revealed that although the city will end the current fiscal year on a strong note, there will still be a negative net income of $3.8 million. The city used net income and fund balance to fund a transfer to supplement the funding of the public infrastructure to support the amphitheater. Without that transfer the city’s estimated net income would be $1.8 million for the general fund.
The FY2026 general fund, which includes expenditures, transfers out and the proposed ending fund balance, totals $153.6 million, a 1.6% increase over the current year. The breakdown of the city’s upcoming fiscal year includes $181 million in operations (up 9.5%), capital outlay (down about 13%) and $42 million in debt service (up 6.3%).
Sales tax revenues are projected to be up 1.5% over the current year. Sales tax is the biggest source of funding for the city and is sometimes difficult to predict. Spurgeon said the city is taking a conservative approach to budgeting “to ensure we can pay for and sustain what we establish.”
Oklahoma is one of the last states in the U.S. that uses sales tax as the primary revenue source to fund general fund operational expenses for municipalities.
“Because our state continues to use this antiquated business model, we spend an excessive amount of time chasing sales tax-type businesses to give our citizens more opportunities to shop local, therefore maintaining and growing our tax base,” he said.
The proposed budget, to be voted on by the City Council June 16, does not include proposed utility rate increases. A five-year rate study that does recommend utility rate increases will be discussed this summer as the City Council reviews and considers adoption of the city’s Manual of Fees.
While the city’s operating revenue and expenses are expected to remain sustainable they “must be watched closely,” Spurgeon said. Among other things, he expects the expenses of the public safety departments to exceed available revenue in the early 2030s.
For the upcoming fiscal year, the city must absorb a $185,000 increase in its contributions to the police pension fund due to state legislation passed last year.
“When this happens, we will become overly reliant on fund reserves. We need to continually monitor this inevitability until additional revenue sources can be identified and implemented,” Spurgeon said. The city is also negotiating with FOP Lodge 170 and IAFF Local 2551 for new agreements.
Spurgeon also mentioned that “nearly everything continues to cost more. Inflation, supply-chain issues and availability of supplies and materials is a huge challenge right now. This is why directors, finance officials and city administration are continually scrutinizing the approved budget throughout the year to ensure our expenses are staying on-track with anticipated revenues.”
The city’s ordinances require each city department receive a dedicated portion of general fund operating revenues, which for the police department is 36.7% and fire department 30.7%.
Based on current total expenses for the police and fire departments, public safety consumes all operational sales tax the city has available, along with 25.2% of all other general fund revenue available. All other departments must operate with the remaining 74.8% of general fund revenue.
“Because of the ever-increasing costs of collective bargaining and maintaining a high-level of service the community has come to expect, we must find an additional dedicated funding source for public safety,” Spurgeon said.
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