MORGANTOWN — The city of Morgantown is freezing 59% of its financial stabilization fund — representing $2 million — as a last-resort contingency measure in light of a $3,237,685 budget shortfall.
The issue comes down to carryover.
When the city passed its $45.3-million general fund budget earlier this year, it factored in an estimated carryover of $5,958,750.
The city’s actual carryover is $2,721,065.
Jon Furgison, who took over as the city’s finance director in July 2024, explained there is a timing factor that plays into the discrepancy which has been exacerbated by misaligned accounting methodology — cash basis for the budget process versus accrual basis for budget carryover.
“In prior years — not every year, but in prior years — that estimate, or that carryover was calculated on a different basis of accounting incorrectly,” Furgison said during Tuesday’s Morgantown City Council meeting.
In essence, past budgets have included inflated carryover amounts that were not based on actual cash and cash equivalents on hand. This issue has compounded over time.
“If we were to continue doing exactly what we have been doing over the past couple of years … we would definitely be in a position where we would be running out of money towards the end of fiscal year 2026,” he said. “I don’t want to put us in that position.”
Furgison emphasized the matter is not the result of overspending or revenue shortfalls, but a technical issue in the city’s carryover calculation method.
The city is taking a number of steps to offset the shortfall in order to present a balanced budget to the West Virginia Auditor’s Office by the July 30 deadline:
— Transfers from the city’s general fund to its capital escrow fund for both the 2025 and 2026 fiscal years will be temporarily delayed until sufficient cash is available.
— The city is bumping up its anticipated business and occupation construction tax revenues by $270,000 based on the commencement of major multi-year projects, like the WVU Eye Institute.
— The city is, at least temporarily, reducing the contribution to its contingency fund from $416,479 to $151,673.
— A $2 million placeholder contribution from the city’s financial stabilization fund, which, if used, would reduce that balance to $1.4 million.
“We are not transferring any cash out of the financial stabilization fund at this time. We don’t anticipate it, again, unless we absolutely have to. Historically, the city does not spend every dime in its budget,” Furgison said. “If this is the case and we continue on our historical trend, we may not actually need this. But just in case, we do have to balance our budget. If we do need it, we do have that available.”
The overall fiscal impact will result in a $1,010,685 net decrease to the city’s FY 2026 general fund budget.
On a 5-1 vote, council approved a resolution amending the budget to reflect that decrease.
Councilor Mark Downs voted in the minority after questioning why cutting costs wasn’t among the proposed remedies.
“I get super concerned about, I mean if we’re looking at putting options on the table — racking and stacking options for how to deal with this, I get it. But when we start talking about approving certain amounts to eat into our contingency, then I get uncomfortable,” Downs said.
In response, Furgison said the budget passed by council was already very lean and that additional cuts would likely start hitting personnel and existing programs and projects.
Even so, both Furgison and City Manager Jamie Miller explained that if revenues aren’t reaching expectations as the city moves through the first quarter, “more drastic measures” will be necessary.
Miller said backstopping the budget with $2 million from the financial stabilization fund is a means to get the spending plan reconciled and to the state on deadline, but the city is working to use as little of that money as possible.
“This is a discussion that has already started with the staff, and that’s part of the discussion related to really just earmarking the fiscal stability fund with intent. The way we intend to not use as much of that is, one, revenue coming in, but also looking for that expense cutting,” Miller said, adding “There definitely is discussion on the table, and in order to make sure we’re not using that fund, that’s going to be through some cost-cutting measures.”
