Crestwood ends 2016 with $4.7 million general fund balance

Revenue outlook entering 2016 ‘dire,’ city administrator says

Kris Simpson

Kris Simpson

By Mike Anthony

The city of Crestwood ended 2016 with a general fund balance of nearly $4.7 million.

City Administrator Kris Simpson told the Board of Aldermen last week that actual expenditures in the city’s general fund for 2016 were less than originally projected when the 2016 budget was adopted in December 2015.

The original general fund budget projected revenues of $7,714,793 with anticipated expenditures of $8,202,148 — a deficit of $487,355.

But actual revenues in the general fund totaled $7,700,391 with actual expenditures of $7,912,252 — a deficit of $211,862.

The original 2016 general budget projected a beginning fund balance of $4,663,773 and an ending fund balance of $4,176,418.

But the actual general fund balance at the beginning of the year was $4,910,275 and the actual general fund balance at the end of 2016 was $4,698,413.

“… Our fund balance, because 2015 ended up better than we had anticipated, our fund balances are actually performing better than budget despite the deficit. We started the year at $4.9 million, and we ended the year at just under $4.7 million, again due to the deficit there …,” Simpson said.

The original general fund budget anticipated revenues of $7,714,793, while actual revenues totaled $7,700,391 — $14,402 less than projected.

“… Revenues did come in close to budget at year end, but how we got there was unexpected, and that I think is something significant to consider,” the city administrator said. “We had significant unbudgeted revenue increases in 2016. The voters approved the use tax in April 2016, resulting in just over $100,000 in new revenue, and that was a partial-year collection. That was not in the 2016 budget.

“So when you see this $14,402, that is including $100,000 of found money, so to speak, money that we did not think we would get because we didn’t know if — I mean at that point actually when we were budgeting for 2016, we didn’t know that the use tax was going to be on last April’s ballot.”

The city also received $56,000 in protested utility taxes — revenue not included in the original 2016 budget — and roughly $60,000 as a result of permit and fee increases, including revenue from the demolition permit for the former Crestwood Plaza.

“So that $14,000 — 99 percent actual revenues to budget — includes over $200,000 in new revenues,” Simpson said. “I point that out because I want to say the revenue situation that we were facing with our current revenues at 2016 was dire. If you take away those revenues that we didn’t think we would get, then the deficit that we had budgeted would have actually occurred. We would be roughly in that $400,000 deficit situation. It’s because of the decisions that the board made to generate some new revenues for the city that the city’s financial position has been protected as much as it could be for the fiscal year 2016.

“And obviously as we all know with the results of the April election, the city’s financial position is hopefully protected for the foreseeable future,” he added, referring to voter approval of Proposition C, a 45-cent tax-rate increase that is projected to generate at least $1.13 million annually for the city.

The original general fund budget projected 2016 expenditures of $8,202,148, while actual expenditures were $7,912,252 — $289,896 less than projected.

“Expenditures were significantly under what we had budgeted at $289,000 below that. So therefore our fund balance, which we expected to be $487,000, a deficit, ended up just being $211,000, which is a $275,000 difference,” he said.

Regarding expenditures, Simpson said, “The biggest explanation of savings is turnover and vacancies … The largest one is the assistant fire chief position that was left vacant with the promotion of Chief (David) Oliveri to chief from assistant chief, and leaving that position open resulted in a significant savings. But there was turnover in other departments, and that amount of turnover resulted in some significant savings.”

Other expenditure savings resulted from lower gas prices, the city’s health insurance premiums increasing 6 percent instead of the 15 percent budgeted for the second half of 2016, and decreased vehicle maintenance and repair costs as the city’s fleet is in better condition than in past years.

The city administrator also compared general fund revenues for the years 1996, 2006 and 2016. In 1996, general fund revenues totaled $7.03 million; $7.57 million in 2006, excluding Proposition S revenues; and $7.63 million in 2016.

“So in 20 years, we’ve seen just about $600,000 in revenue increases. However, when you adjust those numbers for inflation, the change is actually quite striking,” Simpson said.

Adjusted for inflation, general fund revenues totaled $10.73 million in 1996; $9.08 million in 2006, excluding Proposition S revenues; and $7.63 million in 2016.

“So we have seen a striking decline in our revenue sources from the mid-90s, and the main culprit there as you can see is sales taxes. Inflation-adjusted 1996, that’s $6.2 million. That’s almost our entire 2016 general fund budget for all revenue sources,” he said. “What’s especially noteworthy about that 1996 number is that predates the quarter-cent fire local-protection sales tax.

“So that amount of money was generated by a lower sales-tax rate. It just highlights the impact of the loss of the mall, and I’m glad that we finally turned a corner on that chapter …”

For the capital improvement fund, the original 2016 budget projected revenues of $1,152,138 with expenditures of $1,398,294 — a deficit of $246,15.

The original budget projected a beginning fund balance of $1,345,296 and an ending fund balance of $1,099,140.

Actual revenues in the capital improvement fund for 2016 were $1,320,769 with expenditures totaling $1,200,539 — a surplus of $120,230. With an actual beginning fund balance of $1,683,953, the actual ending fund balance totaled $1,804,183.

The original 2016 park and stormwater budget anticipated revenues of $1,870,006 with expenditures totaling $1,984,300 — a deficit of $114,294.

The original budget projected a beginning fund balance of $745,401 and an ending fund balance of $631,107.

Actual revenues in the park and stormwater fund for 2016 were $1,875,178 with expenditures totaling $1,658,679 — a surplus of $216,499. With an actual beginning fund balance of $801,649, the actual ending fund balance totaled $1,018,148.

For the sewer lateral fund, actual 2016 revenues totaled $138,151 with actual expenditures of $119,313 — a surplus of $18,838. With an actual beginning fund balance of $235,659, the actual ending fund balance totaled $254,497.