By Mike Anthony
Crestwood City Administrator Kris Simpson projects the city’s general fund will have a cumulative surplus of $774,000 over the next five years, a scenario that includes levying the full amount of a 45-cent tax-rate increase approved in April.
That’s a stark contrast to roughly a year ago when Simpson projected the general fund would have a cumulative deficit of $7.1 million from 2017 through 2021.
While Simpson projects a cumulative surplus of $774,000 in the general fund from 2018 through 2022, he anticipates the general fund will have a deficit of nearly $105,000 in 2022.
The Board of Aldermen will consider establishing the city’s 2017 tax rates when it meets Tuesday, Sept. 26. The meeting will include a public hearing on the proposed tax rates.
The city’s 2016 tax rates are 27.8 cents per $100 of assessed value for personal property, 24.8 cents per $100 for residential property and 41.4 cents per $100 for commercial property.
If the full 45 cents from the Proposition C tax-rate increase approved by voters in April is levied, those rates would increase to 72.8 cents for personal property, 69.8 cents for residential property and 86.4 cents for commercial property.
The city administrator outlined his financial projections during a Sept. 5 Ways and Means Committee meeting attended by Mayor Gregg Roby and the entire Board of Aldermen.
Besides levying the entire 45 cents of Prop C, other assumptions Simpson used for the projections include receiving $525,000 annually from the county’s Proposition P sales tax for police and public safety, utilizing the city’s new pay plan for employees that budgets a 2-percent “merit pool” for raises each year and anticipating annual revenue growth of 0.5 percent per year, which he termed “optimistic.”
The projections did not include any potential revenue from UrbanStreet Group of Chicago’s redevelopment of the former Crestwood Plaza.
“… So you can see, this is pretty much where we thought we’d be based on the 45-cent forecast. There are some assumptions that have changed from then to now — things that have happened that we didn’t foresee, but by and large it’s, I think, a pretty good-looking forecast, especially when you consider where we came from. Over the next five years, that nets to a surplus of $744,000 …,” Simpson said.
Of the five-year period, he said, “In the early years, we have significant surpluses, but as expenditures rise and revenues don’t really grow all that significantly, expenditures would eventually catch up to revenues with 2022 looking at a $104,000 deficit at the end of it.
“But in the scope of almost a $10 million operating budget, it being five years out, a couple things break this way or that — mall comes in, maybe Watson Road starts to turn around, maybe something else happens that we haven’t yet foreseen — I consider it kind of a wash … It’s so much better than what we were looking at before.”
The city is in a much stronger financial condition today than it was a year ago, Simpson said.
“… We owe that to successfully receiving the support of the community, both for Prop P and Prop C,” he said. “And obviously making a couple operational changes has improved matters again, and yet when you add that all up, I think the forecast indicates we need the full ceiling of Prop C …”
For 2017, the city administrator is projecting a general fund surplus of $345,000.
The general fund currently projects a deficit of nearly $855,000.
The 2017 budget adopted by the Board of Aldermen in December projected a general fund deficit of roughly $524,000.
Aldermen voted unanimously Aug. 22 to approve an ordinance amending the general fund budget to reflect increased expenditures of nearly $331,000, including $109,000 to the Affton Fire Protection District for providing fire service to an area that Crestwood annexed in 1997. The calculation of those payments is based on the Affton Fire Protection District’s property tax rate. In April, voters approved a 25-cent tax-rate increase for the district.
Last year, Crestwood paid $444,604.58 to Affton.
In his presentation, Simpson noted that sales-tax revenue is projected to be $150,000 less than budgeted, revenue from fines and forfeitures is anticipated to be $102,000 less than estimated and police costs will increase by a total $5,000.
When voters considered Prop C in April, the tax-rate increase was projected to generate roughly $1.13 million annually. Due to a projected increase in assessed valuation, Prop C is now expected to generate $1,291,000 annually, the city administrator said.
His projections for the general fund also include $131,000 in Prop P revenue and an additional $35,000 in use-tax funds.
“… The purpose of this meeting is to, I guess, begin discussion on what I expect it would be kind of a serious matter for the city, given that for the first time in a long time, we may end up with a different property tax rate for the community …,” Simpson said, noting the city is required to advertise the proposed tax rates in a public hearing notice. “I’m looking ultimately for some direction as to how you all would like me to fill out that public hearing form. Again, that’s not a binding thing by any means, but that’s what’s going to be published, and obviously getting some of that discussion out of the way, hopefully that will shorten things up at the Board of Aldermen meeting later this month after you all have had a chance to hear from the community …”
Ward 3 Alderman Grant Mabie later said, “So the purpose of tonight’s meeting is to have a discussion on where you would set the rate on the notice to be published that would tell the public we’re having a public hearing at the end of September to actually set the tax rate for 2017?”
Simpson said that Mabie was correct, later noting that until the approval of Prop C, the city’s tax rate had remained un-changed since the 1980s. Because the tax rate had remain unchanged, staff always recommended the city levy the maximum amount “because we needed the maximum … There wasn’t even a thought or a hesitation to it before because of the immediate urgency of needing those moneys,” Simpson said. “This year …”
Mabie interjected, chuckling, “The streak continues from the ’80s? Set it at the maximum?”
Simpson said, “Well, I think the numbers speak for themselves.”
Nearly all of the aldermen indicated they support placing the 45-cent ceiling on the notice for the Sept. 26 tax-rate hearing.