Crestwood proposing to use cash reserves to balance ’09 budget

Aldermen have some ‘unrealistic goals,’ Bland says during budget work session

By BURKE WASSON

Crestwood officials plan to dip into cash reserves to balance the city’s proposed 2009 budget, which initially projects a $637,860 deficit among the city’s three major funds.

While the general fund projects a $49,925 surplus, a deficit of $198,916 is anticipated in the capital-improvements fund and a deficit of $488,869 is forecast for the park and stormwater fund.

Because this reflects a total budget deficit of $637,860 for 2009, City Administrator Jim Eckrich regrettably told aldermen during a work session last week that cash reserves must be used to cover those deficits in the capital-improvements fund and park and stormwater fund.

“Recommending the use of fund balances to get us through 2009, that’s a terrible plan for the future of the city,” he said. “We have to do something to correct this issue. While it may work for 2009, it absolutely does not work long term.”

The capital-improvements fund is projected to have a Jan. 1, 2009, cash reserve of $885,000. If the proposed budget is approved, that reserve would drop to $686,638.

The park and stormwater fund is projected to have a Jan. 1, 2009, cash reserve of $477,000. If the proposed budget is approved, that reserve would drop to $7,500 with the “use of cash funds,” Eckrich said.

And while the proposed 2009 budget shows a $637,860 deficit across all three major funds, Eckrich’s projected five-year plan predicts even greater annual declines. That five-year plan, based on a 2-percent annual cost increase and department heads’ individual five-year plans, forecasts combined major-fund annual deficits of $1.72 million in 2010, $1.61 million in 2011, $1.63 million in 2012 and $1.3 million in 2013.

These estimates have caused aldermen to question what action needs to be taken to provide additional revenue and what current services may have to be dropped.

“We as a board have some unrealistic goals,” Ward 1 Alderman Richard Bland said Oct. 28. “And that is to continue to provide the services we’re providing at the rate we’re providing them … What I’m seeing is a lot of deferral. And that scares me even more than the short-term discussions about having to use funds to kind of balance things out. That’s a bad plan because we’re going to end up right back where we were where we’re going to be owing somebody money if they’re willing to loan it to us.

” … I would say as soon as possible after that budget is approved, I think we really need to start sitting down and taking a look at what we can we really, truly, realistically provide. And if that means we’ve got to start selling off properties because we can’t afford to maintain them, that may be what it means. If that means we run less fire trucks because we can’t afford to run as many as we have, that may be what it means. And I think that’s going to be the only way folks are going to understand that things are tight … We’re not sitting on a lot of cash, and there’s no real prospects for getting any.”

A 35-cent tax-rate increase proposed by city officials was rejected by 72 percent of voters who cast ballots in the Aug. 5 election.

Ward 2 Alderman Michael Kelsch reminded aldermen of that defeat and relayed two predominant messages he heard from citizens — Prop 1 was “too expensive” and the city “didn’t have a plan” to spend that money.

To combat that perception, Kelsch proposed finding a total cost to provide services “as soon as the budget is approved.”

“Citizens of Crestwood, this is exactly what we need,” Kelsch said. “Here is exactly why we need it. And here is exactly how much we need to get by and to continue to maintain the services.”

At the same time, Ward 3 Alderman Jerry Miguel and Ward 4 Alderman Steve Nieder requested that Eckrich find further cuts in the 2009 budget to shorten the city’s projected deficit.

Eckrich replied while that may be “easy to do” now, the future cost of deferring capital projects might be too much.

“In the capital-improvements fund, if the city wanted to balance this fund, it’s very easy to do,” Eckrich said. “You just go in and you cut capital-improvement projects … But I don’t know what the benefit to the city is of holding $800,000 in this account versus $600,000 when you need to make these improvements. The amount that has been cut in this fund, I believe, is in the order of $600,000 of the department head request …

“In the park-stormwater fund, it’s much more difficult to balance this fund. You make cuts in this fund, you typically make cuts against revenues as well. There are ways to cut, but there are drawbacks with those. We have 117 acres of park land. We need to maintain those parks. If we’re not going to do that, I guess that’s a decision the board can make …

“The park and stormwater fund was never designed to handle what it’s handling now. When this fund was passed, it was designed to fund the Aquatic Center, fund capital park improvements and fund stormwater projects and it was estimated to bring in about $2 million a year. In 2009, we’re estimating it’s going to bring in $1.2 million a year.

“And not only do we fund the things that we’ve intended, but we’ve thrown in the operation costs of the Community Center, which never was intended to belong there. And it was all done in order to alleviate pressures on the general fund. What’s resulted is the park and stormwater fund, which at one time had a high balance, is going to end this year, if you pass this budget, with virtually zero balance. A lot of these costs are going to have to get moved back to the general fund or the city’s going to have to decide to use capital-improvement monies to pay for the debt service on the Aquatic Center. Something’s going to have to be done, and that’s going to have to be decided soon after the passage of this budget.”

Eckrich plans to meet with department heads to get them to view the city’s budget as a whole rather than by their department.

“It is my opinion that the department heads in the city have an unreasonable expectation of what we can expect to spend on capital improvements over the next five years,” Eckrich said. “Not that they’ve done anything wrong. It’s just that the city has never looked at its capital-improvements program globally instead of departmentally … The revenues that are expected to come into the capital-improvements fund do not even come close to meeting the future expenditures. If you look at the five-year plan for capital, you’ll see that the department-head requests are almost a million dollars over the anticipated expenditures in 2010. It’s a substantial problem that, once this budget is passed, the city is going to have to immediately begin working on … They’re going to have to start looking at these things from a citywide basis instead of a departmental basis because obviously that’s not working.”