Crestwood board votes to trim city’s proposed 2010 budget by $31,522

Beezley says cutting not the answer; creativity needed to attract business

By EVAN YOUNG

While some Crestwood aldermen believe continuously cutting expenses won’t solve the city’s financial problems, the board asked staff last week to trim more than $30,000 from next year’s proposed budget.

The board voted 7-1 during a Nov. 10 work session to approve Ward 3 Alderman Paul Duchild’s motion for city staff to find and eliminate $31,522 in expenditures from the proposed 2010 budget. Ward 1 Alderman Mimi Duncan was opposed.

As initially proposed to the board, the 2010 budget projected expenditures exceeding revenues by more than $240,000 across all major funds. However, City Administrator Jim Eckrich told aldermen last week that a firefighter’s recent resignation would reduce the amount of cash needed to balance the budget at the end of 2010 by more than $70,000.

Six public-safety positions — three police officers and three firefighters — are being eliminated through attrition as part of the city’s five-year plan to reduce annual expenditures. When the 2010 budget was drafted, one police of-ficer and two firefighter positions had been eliminated.

However, Eckrich said another firefighter recently submitted his resignation, effective immediately, which reduces 2010 general-fund expenditures by $70,415. That trims the projected 2010 deficit across all three funds from $240,437 to $170,022. The two remaining police officer positions are included in the 2010 general fund, for a total cost of roughly $138,500. Duchild subtracted that amount from $170,022 and said the city should cut an additional $31,522 to balance the budget, with the exception of the two remaining public-safety positions.

“Fiscally for me, I think it should start with a balanced budget, and we’re not there yet,” Duchild said. “Economically I don’t think we’re to a point where it would be necessary to use cash reserves.”

Because the city-recommended elimination of the animal-control officer position will be researched over the next few months by an ad-hoc aldermanic committee, Eckrich said the $31,522 in additional budget cuts likely would come from 2010 mill and overlay and asphalt rejuvenator projects, which are included in the capital-improvement fund.

Taking into account the recently eliminated firefighter position, the general fund is projected to realize 2010 revenues of $8,650,109 and spend $8,393,511, leaving a surplus of $256,598.

The capital improvement fund initially is projected to realize revenues of $1,197,480 and spend $1,106,086 — a surplus of $91,394. However, officials are recommending the transfer of $600,000 from this fund to the park and stormwater fund so the latter can make an April 1 debt payment on the certificates of participation issued in 2001 to construct Crestwood’s aquatic center.

The move would leave the capital improvement fund short $508,606, which would require the use of cash reserves to balance the fund.

The park and stormwater fund initially is projected to bring in revenues of $1,931,400 and spend $2,449,414, creating a negative balance of $518,014. With the $600,000 capital improvement fund transfer, the park and stormwater balance will show a positive balance of $81,986.

The sewer lateral fund is projected to have 2010 revenues and expenditures balanced at $150,000.

In all, Crestwood is projected to take in $11,928,989 and spend $12,099,011 next year.

For 2009, the city is slated to bring in a total of $13,752,661 and spend $13,084,876. With the use of $667,785 in cash reserves, 2009 revenues will rise to $13,752,661, creating a surplus of $49,925.

Jan. 1, 2010, estimated cash balance projections are $1,632,703 for the general fund; $757,500 for the capital improvement fund; and $17,600 for the park and stormwater fund.

On Dec. 31, 2010, the general fund is projected to have a cash balance of $1,818,886; the capital improvement fund, $168,894; and the park and stormwater fund, $99,586.

Crestwood’s total estimated cash balance, therefore, would be $2,407,803 on Jan. 1, 2010, and $2,087,366 on Dec. 31, 2010.

In 2010, the city’s general fund is expected to make the final payments on Crestwood’s annual-appropriation note with Royal Banks of Missouri.

City voters in 2006 approved Proposition S, a 20-cent tax-rate increase, to retire $2 million in debt and eliminate a $1.5 million line of credit. Crestwood obtained the Royal Banks note to help retire that debt. The city will make a $303,000 principal payment on the note in March, followed by an $8,300 interest payment in September.

Over the next five years, the city’s cash balance is expected to decrease in light of declining revenues and increasing costs. Five-year projections, however, show Crestwood’s cash balance dropping significantly after 2012, when the Prop S tax sunsets.

While the city is projected to have a Dec. 31, 2012, total cash balance of $2,194,690, that amount will drop to $1,601,429 on Dec. 31, 2013, and $672,703 at the end of 2014.

Eckrich said the city would need to take corrective action before 2013 to “avoid a storm at that point.”

However, he said the projections don’t take into account the possible redevelopment of the Crestwood Court mall.

Representatives of Jones Lang LaSalle, the mall’s management firm, said in January the owners hoped to unveil a redevelopment plan in six months and break ground in one to two years.

That plan has yet to appear, but Mayor Roy Robinson predicts Crestwood will see its financial situation greatly improve when the redevelopment does happen.

“If the economy doesn’t get better, this is probably what it’s going to be,” Robinson said last week of the city’s current five-year financial projections. “But if the economy gets better and the redevelopment of that mall goes as scheduled, we could see a completely different picture by 2013.”

“But by the same token,” Ward 2 Alderman Chris Pickel added, “we could see a bleaker picture …”

Robinson replied that the city’s current five-year outlook already was the “worst-scenario right now, because this is what we’re looking forward to if nothing’s done.”

“No I understand,” Pickel said. “It’s just the likelihood is that we’re not out of the tunnel yet …”

“I’m not saying we are,” the mayor said. “But there are certain things that could make this picture completely different by 2013 or 2012 …”

“Good or bad,” Pickel added.

Still, with no employee pay increases in 2010 and the elimination of six public-safety positions through attrition, some aldermen believe the city should find ways of generating revenue instead of continuously reducing expenses.

“If we keep on the rate that we’re going with attrition and cutting, we’re not going to have a staff to be able to deal with the critical situations to have the loyal customers we’re going to need in this community,” Ward 4 Alderman Deborah Beezley said. “So it’s going to be incumbent upon us as a board to figure out creative ways that we can bring business back into this community, because that’s the only way we’re going to survive.

“Cutting is not the answer. We have to stop the cutting and start becoming creative to build business back in this community.”

Fellow Ward 4 Alderman John Foote said officials have “stretched the Band-Aid on this city to cover it” and that deficit-spending isn’t unique to Crestwood.

“When you start talking about running into deficit-spending, anybody know any city, any state, any federal government that isn’t up to their behind in overspending and using reserves?” Foote said. “Anybody flush with cash, anybody know anybody like that? In almost every instance, these entities that are surviving are surviving by utilization of reserves and cuts just as we are …

“We’ll survive 2010, but it isn’t just going to continue to go by pulling the plug and cutting costs. We’re going to have to do something to develop and maintain this city.

“Our answer isn’t to continue to cut,” Foote said. “Our answer is to get a little more innovative and try to find a way to get through this period. Hopefully we will see some upturn.”