Highland City Council approves budget with an anticipated surplus

Highland is looking at a surplus after some budget cuts and passage of a $52.1 million budget.

The Highland City Council voted Monday to approve the budget for 2024-2025 for $52,140,562 in anticipated spending 4% less than last year. City Manager Chris Conrad wrote in his statement to the mayor and council members that they anticipated a 4% decrease in revenue, which is why they reduced expenditures.

Approximately 85% of the budget is for operations and maintenance of city services, 10% for capital expenditures — meaning construction and equipment — and 5% for reserves. There were some adjustments this year, with a little more money moved from operations and reserves toward capital spending, as there are upcoming projects that will take a little more funding, Conrad said.

Among those are new citywide software; migrating Highland’s electric service to “smart meters” for efficiency; replacing the main breaker at the Northtown substation; deferred maintenance at the Korte Recreation Center and city pool with a new parking lot at the KRC; and other such projects.

“We are still feeling the impact of inflation on our operating expenses,” Conrad said. “Our diverse sources of revenue and conservative approach to budgeting have protected us from making impactful decisions, but inflation combined with unfunded mandates at the state level have exacerbated the issue of the rate of revenue growth to expense growth.”

That said, the budget is showing an anticipated $885,575 surplus, according to Conrad’s summary.

Conrad said the city will be hit by the proposed suspension of the grocery tax, which goes exclusively to local governments. If it is approved, the city will lose approximately $280,000 a year in income, he said.

“We continue to see shifts in the funding sources from the state, which make the budget process a little more complex than normal,” Conrad said.

In the past, Highland has managed issues such as these through delaying hiring, not filling empty positions, and delaying equipment purchases and capital projects.

“This conservative management approach has served the city well in the past and has us in a very solid financial position to weather these economic pressures until revenues balance out,” Conrad said.

Public safety is “moving into a maintenance phase” after major changes including the new building, the reduction of the EMS staff and eliminating the service contracts for other fire protection districts. Public works is returning to the water main replacement projects, including Sixth, Laurel, Pine and Cypress streets.

In community development, enforcement of city codes is now part of the Public Safety Department, evaluating structures that need demolition and mitigating derelict properties. Those efforts will be coupled with incentive agreements to encourage development and the continued facade improvement plan in the business district. The city is also pursuing an extension of the existing tax increment financing districts and creating a third.