Crestwood board votes 7-1 to put tax-rate hike on Aug. 5 ballot

Miguel votes ‘no,’ estimates city’s cash on hand totaled $4.8 million as of end of April

By BURKE WASSON

Crestwood voters will decide Aug. 5 whether to approve a six-year tax-rate increase of 35 cents per $100 of assessed value to head off declining retail and property-tax revenues.

The Board of Aldermen voted 7-1 last week to place the proposed tax increase on the ballot. Ward 3 Alderman Jerry Miguel voted “no,” saying he has “not seen the case made for a million-dollar tax increase.” He believes the city can further reduce costs through employee attrition and also increase revenue by having residents vote on a utility-tax increase.

But the majority of aldermen cite three town-hall meetings that took place from January through March at which residents present expressed a desire to see the city maintain its current levels of service. Coupled with sinking revenues and rising expenses, city officials believe a property-tax increase is necessary. The measure would tax residents an additional 35 cents per $100 of assessed valuation and generate an estimated $1,130,528 per year. For an owner of a $200,000 home, the tax increase would cost $133 per year, or roughly $11 per month.

Residents already pay a combined 37.4 cents per $100 of assessed valuation between the city’s 20.5-cent municipal tax rate and 16.9-cent tax rate from Proposition S, which initially was approved as a 20-cent tax increase in 2006 by voters to pay off and refinance more than $3.5 million in debt and line-of-credit expenses. Due to reassessment in 2007, aldermen subsequently rolled the Proposition S rate back to 16.9 cents from 20 cents.

If the 35-cent tax-rate increase is approved, residents would pay a total tax rate of 72.4 cents until 2012, when Proposition S expires. For an owner of a $200,000 home, the total tax paid to Crestwood each year would rise to $275 from its current level of $142.

While Mayor Roy Robinson recently estimated that the city has $3.5 million to $4 million in cash on hand, he said he was troubled by a first draft of the city’s 2007 audit as well as a recent report of the city’s finances for the first quarter of 2008. The 2007 audit has not yet been presented to the public, but aldermen met in an April 22 closed session to discuss that audit’s findings.

A presentation of city finances at an April 30 town-hall meeting showed that while $12,676,109 is budgeted for city services in the 2008 budget, Crestwood officials now believe that “the city may not have enough revenue to cover those expenditures.” At a May 8 work session to discuss the proposed tax-rate increase, city officials said that if the city can’t make up the revenue this year to pay for expenses, the city’s reserve cash of $3.5 million to $4 million would be utilized.

But Miguel estimated at the board’s May 13 meeting that on April 30, the city had more than $4.8 million in cash on hand based on a cash-flow analysis rather than the modified-accrual basis used in the first-quarter financial report.

In the first draft of the city’s 2007 audit, the city is estimated to have experienced a $600,000 drop in sales-tax revenue from 2006 to 2007 largely due to closings at the former Westfield Shoppingtown Crestwood mall, now called Crestwood Court. That drop can be attributed to the October 2007 closing of Dillard’s as well as vacancy rates approaching 50 percent.

And through the first quarter of 2008, due to several one-time expenditures as well as a drop in revenue, Robinson said the city had “$2 million less in cash on hand” than it did at the start of the year.

Among those one-time expenses was a $525,000 prepayment in March on the city’s remaining $2.08 million in debt on an annual-appropriation note with Royal Banks of Missouri and $377,600 in February for a new police communications system.

With these expenses as well as feedback from residents at this year’s series of town-hall meetings devoted to services like fire, police, administration and public works, board President Chris Pickel of Ward 2 said aldermen felt obligated to see if residents would support a tax-rate increase.

“Following those meetings, the topic of a substantial property-tax increase began to surface,” Pickel said. “It was at that point at one of our meetings that a citizen stepped forward and spoke out in support of such an in-crease. That became the responsibility of this staff and this body to determine what is a reasonable increase as we look at the expenses facing the city as well as the potential revenue picture going forward.

“… We looked at audited numbers for 2006 and 2007 to really get our hands around the current situation. We looked at actual numbers from the first quarter last year compared to the first quarter this year, and there is a substantial decrease in retail sales tax. We looked at several different scenarios that city staff had put together in terms of increases of 20 cents up to 35 cents. And after great discussion, this board recommended a 35-cent increase.”

But Civil Service Board member Martha Duchild has a different recollection of the recent town-hall meetings and says residents indicated a preference to maintain only the city’s Fire Department rather than all services.

“There seems to be a misconception about what citizens came away with from those town-hall meetings regarding costs,” Duchild said. “If you watch the videos, and I was at the first town-hall meeting regarding the cost, a certain paper published and certain aldermen have mentioned that there is an overwhelming support from the citizens for maintaining the services or even increasing the type of services presently offered.

“And this simply is not true. The only service that was mentioned was the Fire Department. People asked that Crestwood keep its own Fire Department. Other than that, there were no comments or overwhelming public mandates to maintain the services of the city.”

Ward 3 Alderman Gregg Roby, who said at the May 8 work session that a 35-cent tax-rate increase still might not be enough to cover expenses through the next six years, said the need for a tax-rate increase is not only from losses in sales tax, but also an expected decline in property-tax revenue. The city’s mall sold for $17.5 million in March after being purchased in 1998 by the Westfield Group for $106 million.

“It’s not only sales tax at this point in time and this economy that is suffering,” Roby said. “Because of the fact that we’ve lost businesses at the mall, we’re also losing business-license revenues. We’re losing all of the other items that are tied in with those tenants being up there. Not to mention the fact that currently today our real-estate market in this county and in the city of St. Louis is depressed.

“The number of homes that are going on the market right now, in order to compete with those sales that are out there, are reducing their prices to numbers below what they’ve been appraised at, which means when those houses sell, we can expect less property-tax revenues in the future. So this review by the board at our work session was not just geared towards sales tax, but the overall picture and also the board’s overall commitment that we are going to provide the citizens of Crestwood with the best possible service at the least possible cost.”

At the very least, Ward 4 Alderman John Foote hopes that the ballot issue will push residents to further inquire about the city’s finances and gain a greater understanding.

“One of the reasons that we wanted this on the ballot was so that the residents will look at the issues and dig to be sure that they’re satisfied with the answers,” Foote said. “So between now and the election, if you’ve got questions and you need answers, bring them up because when we have that election and we vote, if you vote to pass the tax, you should understand about what it will do. If you vote to reject the tax, you should also know what it will do. The board is not taking a position other than recommending and allowing the citizens of this city to make the decision in August. Get the facts and vote.”