Crestwood officials set goal of $400,000 fund balance by end of 2007

General-fund revenue will go to annual-appropriation note


After initially projecting a surplus of $167,000 to end 2007, Crestwood administrators now are targeting an overall balance approaching $400,000 by the close of this year.

During an April 24 presentation of the city’s finances for the first quarter of the year, Assistant City Administrator Justina Tate told aldermen that the administration would like to collect 1 percent more than budgeted revenues and spend 1 percent less than budgeted expenses.

Specifically, Tate said the city is targeting the collection of $89,999 more than budgeted in general-fund revenue and spending $88,601 less than budgeted in that fund. That would increase the general fund’s anticipated end-of-the-year surplus from slightly more than $165,000 to more than $343,000.

The administration also is attempting to generate $13,186 more than budgeted this year in the city’s capital-improvements fund. Tate said the city is working to spend $23,788 less than budgeted in that fund.

The capital-improvement fund’s surplus for this year then would jump from its budgeted level of roughly $1,400 to more than $38,000.

In the city’s park and stormwater fund, Tate said the city hopes to collect $21,855 more than budgeted in revenue and spend $23,153 less than budgeted in that fund. Because the park and stormwater fund is budgeted to break even with the help of a $130,000 transfer from the general fund, that transfer from the general fund then would drop to $86,000.

City Administrator Frank Myers said while he believes the administration’s goal of collecting 1 percent more than budgeted in all revenues is attainable, the city was slightly below that goal for the first quarter.

“If you’re trying to measure this quarter to our benchmark, which the benchmark is 1 percent over budget, the numbers that we’ve run show that our revenues are performing at about 0.75 percent over budget,” Myers said. “Or not quite at the benchmark of 1 percent over. But they are over budget by less than a percent.”

One revenue area in which the city hopes to improve is its sales tax. While that sales tax is performing better than budgeted, overall sales tax collected is still down an estimated $21,000, or 1 percent, from the first quarter of 2006.

At the close of the city’s first quarter on April 1, the city had collected $2,923,837 in general-fund revenue, which is more than the $2,674,552 in general-fund revenue that was collected by April 1, 2006.

General-fund revenue collected in this year’s first quarter totals 32 percent of the $8,999,902 in revenue budgeted for the end of the year in that fund.

But while this year’s general-fund revenue is more than it was at this point last year, Tate said $206,000 of the city’s $249,285 jump in this year’s general-fund revenue is due to the collection of property taxes resulting from Proposition S.

Proposition S is a tax-rate increase of 20 cents per $100 of assessed valuation approved in April 2006 by voters to pay off $2 million in debt and a $1.5 million line of credit. The additional tax has a seven-year sunset provision.

Those Prop S funds were reserved in October to pay off a seven-year $2.87 million annual-appropriation note with Royal Banks of Missouri that refinanced Crestwood’s debt.

But Tate said because Prop S is designed to generate an estimated $520,000 in property taxes each year and the city owes $553,000 in principal and interest payments on the note this year to Royal Banks of Missouri, the difference of more than $30,000 will have to come from the general fund.

“We knew that Prop S would not be able to fund the first payment because of the way they (Royal Banks of Missouri) broke out their fiscal years,” Tate said. “We budgeted $553,000 in payments. And the projection for Prop S was only $520,000. So when we adopted the budget, the difference between that $520,000 and $553,000, the general fund is going to have to cover … For the first year, our principal and interest payments, it’s going to be $553,000.

“For the rest of the six years, we are going to pay approximately $487,000. Prop S has always been projected to take in about $520,000. So Prop S will be able to cover our principal and interest payments going forward.”

Mayor Roy Robinson said he believes the city will be able to recover the difference of more than $30,000 taken out of the general fund this year to pay for the principal and interest payments on the annual-appropriation note. He reiterated that Prop S funds will remain the primary source of paying off the note and said those Prop S monies would not be used for anything else.

“Prop S is Prop S money,” Robinson said. “And if we take money from the general fund to support Prop S, which is already established and it’s the only thing it’s being used for, then somewhere along the line we ought to be able to get the money that we had to cover back into the general fund. I mean, that money has to be there because there’s enough money … What I’m saying is we should track that so that we will get it back when the money’s there to do that back into the general fund.”

The city already made a $486,000 payment on March 1 to the annual-appropriation note. Roughly $67,000 in interest payments are then due on Sept. 1.

As for general-fund expenditures, the city spent 28 percent of its budget — or $2,477,158 out of a budgeted $8,860,149 — in the first quarter. That is more expenses than last year, when the city had spent $2,199,060 by April 1 in that fund.

“Another reason that we’ve seen expenditures increase slightly is because for fiscal year 2006, we really held expenditures as much as possible,” Tate said. “Toward the end, we started running low on supplies. So this first quarter, we’ve been restocking on our supplies. And through our department reviews that we held last week with each department head, we did stress the message of holding expenditures for this next quarter.”

Board President Jerry Miguel of Ward 3 said while he, too, would like to see the city hold its expenditures, he questions whether the city is building a sufficient cash reserve that would allow projects to be completed as budgeted while still funding day-to-day expenses in the second half of the year.

“We are building cash in the first six months and we are spending more than we receive in the last six months,” Miguel said. “It seems to me that we have a difference from July to December of something close to a million dollars. And I’m wondering if we’re building sufficient cash here to cover how much more it’s going to cost the city to operate in the last six months.”

“Well, one area where we’ll have an influx of cash is the business licenses in June,” Tate said. “It’s really mainly the last quarter is your rough part because the sales tax drops …”

In the capital-improvements fund, the city collected $443,164 in revenue by April 1 compared to $434,465 generated by that time last year. This year’s revenue collected in the first quarter totals 17 percent of the $2,536,282 budgeted this year. Of the more than $2.5 million in revenue budgeted in the capital-improvements fund in 2007, $1.1 million is expected to come in grant monies.

The city has spent $55,802 of $2,378,805 in budgeted expenditures in the capital-improvements fund. While that amount spent by April 1 totals only 2 percent of this year’s budget, the majority of capital-improvement expenses occur later in the year for projects like street improvements. Last year by April 1, the city had spent $14,980 in its capital-improvements fund.

In the park and stormwater fund, the city had generated $624,828 in revenue — or 29 percent of this year’s budget — by April 1, compared to $591,118 at that time last year.

Expenditures in that fund have been $1,108,447 this year, which is 48 percent of the $2,315,383 budgeted for the entire year.

Tate said the reason for that high amount of expenses in the first quarter is because the principal and interest payment of $951,000 on 2001 certificates of participation for the city’s aquatic center was due March 31.

In May, aldermen will be updated on the city’s five-year financial plan with a work session to follow in June. Part of that five-year plan includes the city’s street plan, vehicle-replacement plan and maintenance plan. Myers said while the administration is projecting a five-year financial picture for the city, it ultimately will be the responsibility of aldermen to set policies to determine how to best spend the city’s monies.

“The intent of the five-year projection is to project out as best as possible revenue performance over five years and what we believe the expenditures will be for the city …,” Myers said. “Ultimately, it’s the policy decision of the board to figure out if there’s a gap as a result of the needs outpacing revenues, which ultimately is going to be shown. Policy decisions are going to have to be made on what the priorities are going to be to close that gap.”