Finance Committee - August 17, 2026
The Regular Meeting of the Finance Committee of the City of Fargo, North Dakota, was held in the Commission Chambers at City Hall at 10:00 a.m., Monday, August 17, 2026.
Commissioners present or absent were as follows:
Present: Boschee, Gullickson, Peterson, Strand.
Absent: Turnberg.
Mayor Boschee presiding.
Staff attending: Finance Director Susan Thompson, Assistant Finance Director Wyatt Papenfuss, City Administrator Michael Redlinger.
Order of the Agenda:
Commissioner Gullickson moved the Order of the Agenda be approved. Second by Peterson. There was unanimous approval.
Minutes:
Commissioner Strand moved the minutes from the July 27, 2026 meeting be approved. Second by Gullickson. There was unanimous approval.
Standing Items:
Finance Director Susan Thompson presented a review of the June General Fund year to date and the General Fund year end projections as of June, addressing key revenue trends, expense timing misalignments and administrative processes.
Revenue trends: Property taxes remain consistent, interest earnings and building project service fees exceeded budget, while construction-related licenses, permits and franchise fees trended below budget. Intergovernmental grant revenue and State aid are down, offset by lower corresponding department expenses.
Timing discrepancies: Key items were budgeted in wrong months relative to actual receipt/payment. Homestead, veterans and primary resident credits were budgeted for June or earlier but arrive in July and the actuarial contribution for fire safety (budgeted for June) was paid in July. Debt service transfers are budgeted throughout the year but executed in a single lump sum.
Axon budget adjustment: An upcoming budget adjustment for Axon will update and align expenditure figures.
Year-end projections and operations: Factoring in higher CIP fees, lower permit revenues and salary savings from current staffing levels, the General Fund is projected to break even at year-end.
Reporting process: Monthly books close around the 5th or 6th of each month, with the July report expected shortly to better align the reporting schedule.
2026 Refunding Improvement Bond:
Ms. Thompson said the City annually issues Refunding Improvement Bonds in the fall to receive proceeds by year-end, reimbursing funds spent on ongoing infrastructure projects. The upcoming 2026 issue totals approximately $47 million. Projects follow established policy, such as alley paving initiated by neighborhood petitions, meaning they are intended from the start to be funded via bonds and special assessments.
Awarding structure and timeline strategy: Steve Scharf, municipal advisor with Baker Tilly, presented two sale options for the upcoming September 28 Commission action: parameters resolution authorizes a designated group to award the bond sale if market rates and par amounts stay within pre-approved "not-to-exceed" limits; sale date, November 4, 2026, which offers operational flexibility to price on optimal days and navigate Federal Reserve rate decisions or holiday scheduling; direct Commission award, the full Commission retains award authority on the exact day of sale; sale date November 9, 2026, a Commission meeting date.
Commissioner Strand asked if parameters ever change between award and approval and Mr. Scharf clarified that the parameters set strict ceiling guardrails; flexibility is primarily used to pause or timing-optimize sales if unexpected macro events occur, such as off-cycle Fed decisions.
Ms. Thompson noted that bond awards almost universally go to the lowest pre-qualified bidder.
Commissioner Peterson expressed support for parameters, citing the benefit of financial flexibility.
The Committee agreed to move forward with the parameters resolution on September 28.
Municipal market conditions and economic outlook: Current municipal market benchmarks (MMD Triple-A) sit near long-term historical averages (1993–present data).
Rates are up roughly 0.30% compared to the City's bond sale at the same time last year.
Daily rate fluctuations average 0.03% to 0.05%. Primary drivers include geopolitical tension, specifically Middle East conflicts and Strait of Hormuz activity, oil/inflation risks and shifting expectations around Federal Reserve policies. Baker Tilly will use current market data to frame the specific "not-to-exceed" rate thresholds for the September 28 resolution and will monitor conditions closely ahead of the November pricing.
2025 Year End Audit:
The City’s Finance team and Brian Stavenger from Eide Bailly presented the results of the 2025 annual audit. The City received clean, unmodified opinions for both its general financial statements and its Federal program expenditures, with zero audit findings. Additionally, the Finance Department earned the GFOA Certificate of Achievement for Excellence in Financial Reporting for the 27th consecutive year.
Financial reporting and audit process overview: The City operates on a December 31 calendar year-end. Expenses and revenues are accrued through March/April, on-site/remote audit testing occurs in April/May and reports are finalized by June 30.
City Auditor role: Reimagined over the past year, duties align with State Century Code rather than formal internal performance audits.
Financial statements and Federal funds (single audit): Clean, unmodified opinions with no findings.
Scope and assurance: External auditors evaluate internal controls, verify third-party data, perform recalculations and confirm reasonable assurance that financial reports are accurate and fairly presented.
General Fund reserves and financial position: Total General Fund balance ended at just under $41 million across five categories (non-spendable, restricted, committed, assigned and unassigned).
Unassigned reserve ratio: In 2025, the City's unassigned fund balance surpassed its internal target of 25% of annual expenditures (above the GFOA recommended minimum threshold of 15%).
Note on Moody's rating and tools: A $5.59 million land sale contributed to the reserve bump. City management noted that intentionally budgeting a 25% underspend in the General Fund will help keep reserve ratios stable as revenues scale. Utility fund balances are also being monitored for future growth.
Federal expenditures and airport context: Federal grant spending normalized following the burn-down of COVID/ARPA dollars.
Reporting shift: Beginning in 2022, the Municipal Airport Authority began operating under a separate audit umbrella. Approximately $26 million in Federal airport funds in 2025 are reported separately rather than within the City's primary audit booklet.
Future outlook and accounting standards: Upcoming Governmental Accounting Standards Board (GASB) pronouncements are projected to have a minimal operational and financial impact on the City compared to major standard shifts over the past decade.
AMI Project:
Water Utility Director Troy Hall and Public Works Director Ben Dow presented context regarding an item on the August 17, 2026 Consent Agenda requesting a purchase order increase of $944,623.00 for the Advanced Metering Infrastructure (AMI) project. The increase is purely an administrative/housekeeping adjustment to account for 1,900 specialized "Ally" remote-capability meters ordered at the start of the project. No new budget funds or budget changes are required, as the expenditure was previously budgeted within the overall project scope.
AMI project scope and status: Initiated via an RFP in October 2023 and awarded in April 2024 to Core & Main/Sensus, the project covers roughly 30,000 water meters across Fargo. It involves Public Works, the Auditor’s Office, Water Utility and Engineering (GIS). Originally planned as a 3-year project, implementation is well ahead of schedule with 87% of meters installed. Most remaining inventory is already in Fargo and paid for.
Remote capability: 1,900 Ally meters were purchased and delivered in late 2024. These meters allow the City to shut off or restore water service remotely from the Auditor's office without dispatching field technicians and were selected based on Auditor's office data for high-turnover properties (e.g., rentals) and accounts with frequent late payments or non-payment. The meters eliminate manual trips to turn stop boxes on/off, avoids after-hours overtime callouts when customers pay late in the day and need immediate reconnection, provides high operational ROI and improves safety/convenience for staff.
Lead service line mapping: Installers took photo documentation inside homes during meter replacements, which provided crucial, previously unknown data regarding internal plumbing materials (lead vs. non-lead lines) to support the City's ongoing lead service line replacement initiative and Federal reporting requirements.
Purchase order adjustment rationale: The 1,900 Ally meters were ordered in 2024 under the contracted unit pricing, but were omitted from the original purchase order setup in the Finance system. Increasing the purchase order authorization provides the Finance Department the proper documentation to clear outstanding vendor invoices. It uses funds already appropriated in the project budget and requires no net budget increase.
Reclassification of Primary Tax Credit:
Primary tax/resident tax redit reclassification: The State-subsidized primary property tax credit, valued at $5.7 million (representing the $1,600.00 property tax credit for Fargo residents), is being reclassified from line-item property tax revenue to intergovernmental revenue. Staff recommended continuing to budget this under total property taxes initially for clearer year-over-year "apples to apples" comparisons, followed by an annual reclassification adjustment, as State funding is subject to Legislative biennium appropriations.
Public safety budget adjustment and staffing: The previous budget assumed a full year of Axon camera contract costs, but the contract began mid-year, requiring only six months of funding. Decreasing this expense returns approximately $500,000.00 to the Public Safety Sales Tax fund. Combined with other minor adjustments made with the Police Chief, these savings allow the City to fund two additional police officers through the Public Safety Sales Tax over the long term.
Tax credit participation and resident outreach: Fargo saw roughly 90% participation in the primary tax credit, aligning with Statewide participation rates of 92% to 96%. Commissioners emphasized capturing unused funds for residents who may miss out due to technology barriers or lack of awareness. Staff highlighted existing outreach efforts (water bill inserts, social media) and expressed hearing about any ideas for expanding communication channels in partnership with County assessors. Commissioners also noted the importance of raising awareness for other underutilized State programs, such as the renters tax credit.
Special Election Update:
Logistical and administrative setup: Polling hours will be 7:00 a.m. to 7:00 p.m. on October 6, ballots will be hand-counted at the close of voting. Paper poll books will require manual reconciliation between polling places to verify voter eligibility and ensure no duplicate voting occurred. Staff proposed utilizing two polling places to ensure voter convenience, one central/south location along the 25th Street corridor, likely a church and absentee balloting begins 40 days prior to election day. Staff are coordinating with County records to cross-reference voter lists and issue requested ballots. Because City Finance and HR teams are undergoing a major software update in October, hiring and onboarding external election workers presents an administrative burden. The
City plans to utilize internal City employees as inspectors and judges, supplemented by experienced County election workers as needed.
Polling place location: Commissioners debated whether municipal voting should return to public schools rather than churches or private facilities. Commissioners and staff noted that local school superintendents previously removed polling places from schools due to student safety, locked-door security protocols and space constraints during normal instruction days. Staff evaluated the Fargo Parks Sports Complex, but noted it may be too far south for central residents.
Post-election expectations and next steps: Due to the hand-counting process and manual reconciliation of two paper poll books across locations, election results will take longer to compile than standard electronic tabulations. Legal counsel will provide a dedicated briefing detailing the administrative timelines and next steps depending on the outcome of the ballot measure.
2027 budget discussion:
For the upcoming meeting on August 26 the Committee will discuss adding or removing items from the budget. Commissioners were asked to consult with department heads and liaisons in advance regarding any proposed changes.
Commissioner Peterson said he will provide a list of proposed, non-impactful budget modifications to leadership a week in advance to give everyone time to digest the data.
Cost of Living Adjustment (COLA): There was consensus among Commissioners to move forward with the proposed 3% COLA in the preliminary budget. Commissioners discussed peer benchmarks, noting Cass County is proposing a higher rate (3.5% COLA + 3% market adjustment, totaling an 11% with step increases).
Public safety and police staffing: The preliminary budget proposed adding 4 new police officers, but Commissioners expressed a desire to increase this to 8 officers, matching the Chief's original request. Commissioner Peterson said he is working on identifying non-impactful budget reallocations to fund the additional 4 officers.
Ms. Thompson clarified that the Public Safety Sales Tax is not currently being used to pay off old debt.
Fire Department and training facilities: Commissioner Gullickson advocated for restoring the Fire pay differential and reallocating previously allocated funds to support training facilities and necessary equipment.
Market rate adjustments and compensation: The preliminary budget includes $677,000.00 from the General Fund and $48,000.00 from Enterprise Funds for market rate adjustments, which includes the Fire pay plan and shift differentials.
Commissioners debated the necessity of further market adjustments. Recruiting challenges in specialized field, such as nurse practitioners in public health, due to uncompetitive pay rates.
Commissioner Peterson highlighted low turnover rates and high employee longevity, noting that nearly 50% of staff are at the top of their pay range, suggesting current compensation is retaining staff.
Commissioner Strand referenced a recent employee survey showing that more than 30% of employees indicated they were considering leaving.
Utility rates: The benchmark estimate in the preliminary budget is $14.77/month based on 6,000 gallons of water usage. The Commissioners requested a breakdown based on actual usage (enabled by new smart meters), noting many households use less than 6,000 gallons, which could lower that benchmark figure.
The meeting adjourned at 11:32 o’clock a.m.