Crestwood’s finances turn ‘a critical corner,’ Myers says

Second-quarter financial review presented Tuesday to aldermen

By BURKE WASSON

Crestwood City Administrator Frank Myers believes that the city’s financial well-being has improved, but also knows that it will take a few more years to fully revive.

The trick to doing that, he says, is to build on the improvements he sees in the administration’s second-quarter financial review for 2006.

“Based upon our first-six-month performance, both revenues and expenditures, I do believe that we’ve turned a critical corner,” Myers said. “Our financial position is improving, but it’s going to take us a good four years to bring it back to where it needs to be. But we’ve turned the corner, and I do want to get that message out. I do believe we’ve turned the corner between Prop S passing, between our revenue performance and our expenditure control. We are going to finish the year in a positive cash position barring some unforeseen crisis. And we’re going to build upon that in 2007.”

Myers and Assistant to the City Administrator Justina Tate were scheduled to present Crestwood’s second-quarter financial review to the Board of Aldermen at its Tuesday night meeting — after the Call went to press.

The city’s administration has tried to keep expenditures in check and has enjoyed more sales-tax revenue than anticipated in its general fund.

But the city has also had to deal with sales-tax revenues lower than expected in in its two other funds — capital improvement and park/stormwater.

The city’s sales-tax revenue, which was budgeted across the board this year at 4 percent less than last year’s collected dollar amount, is performing 1.3 percent lower than last year in its general fund — or 2.7 percent higher than budgeted for this year. That amount so far this year in the report is $2.56 million.

But Tate said this year’s capital-improvement sales-tax revenue ($786,093) is down 5 percent from last year, which makes it 1 percent below budget, and this year’s park/stormwater sales-tax revenue ($901,255) is 6 percent lower than last year, making it 2 percent below budget.

Myers said this makes it even more difficult for city employees to keep all three of Crestwood’s funds — general, capital improvement and park/stormwater — in line.

“Our revenues in the general fund are actually doing better, even though sales tax has been, you know, kind of like the Dow (Jones Industrial Average),” Myers said. “Sales tax is breaking even. Although we have a couple down, we have some others up that more than make up for that. Spending across the board in all three funds have been down. And our reliance on sales-tax revenue to fund the park and stormwater fund and fund the capital-improvement fund is creating some challenges for us because our sales-tax numbers are dropping greater than we budgeted them to drop.”

At the same time, Tate points out that the city has collected up to where its budget was at this point in 2005 on its one-cent sales tax. This, she said, helps to even out the city’s sales-tax revenue in the general fund.

City officials have already collected 60 percent of the general fund’s budgeted revenues for this year while spending 46 percent of budgeted expenditures for that fund, according to the report.

Myers compared that to last year’s second-quarter financial picture of the general fund, when city officials had collected 58 percent of budgeted revenues and spent 47 percent of budgeted expenditures, and sees improvement in this year’s fiscal activity.

“The city collected 60 percent of its budget revenues compared to 58 percent last year,” Myers said. “So our revenues are up in comparing collection by budget about 2 percent, which we’re pretty pleased about. Also this year, we spent 46 percent of the budget for the first half of the year compared to 47 percent last year.”

The report shows that the city has spent $4.11 million of $5.08 million collected in revenue toward its general fund this year.

As for Crestwood’s capital-improvement fund, the city has spent $70,053 of $787,364 collected toward the fund so far in 2006. That equals the city collecting 49 percent of its budgeted revenue ($1.60 million) for the year and spending only 13 percent of its budgeted expenditures ($552,968).

Because those tax revenues collected toward capital improvements are down 1 percent of what had been expected, Myers said city officials probably would continue to closely watch spending in that fund for the rest of the year.

“We’re watching that (capital-improvements) fund carefully and make sure that we don’t overspend in that,” Myers said. “But that budget’s going to be real tight for the rest of the year.”

The city’s park/stormwater fund, which also shows tax revenues at 2 percent below the 4-percent dip in budget projections, has seen $568,876 spent out of $1.55 million collected so far in 2006. Those figures also equal 41 percent of this year’s budgeted expenditures ($1.43 million) being spent and 61 percent of this year’s budgeted revenues ($2.55 million) being collected. Last year, the city spent 44 percent of its park/stormwater budget.

Some highlights illustrated in the administration’s report for the general fund include increased funds in gas tax and the city being able to collect 87 percent of its merchant-license fees already this year.

But Myers and Tate both see room for improvement in the city’s fines and court costs, which are down in 2006 and still not performing as projected.

Revenue collected so far this year from fines and courts costs is at $116,420, which is 44 percent of this year’s budgeted amount of $265,892.

“Fines and court costs, we are down compared to where we should be,” Tate said. “But our traffic tickets have doubled (in the past few months). So we’ll be really watching those very closely for the next six months to see how those perform.”

Myers and Tate also reported that the city should benefit from general-fund savings in the following areas: a $12,000 savings from the City Clerk’s Office in election costs, a $2,000 savings in court costs and other professional services, $8,000 savings in one month’s salary and benefits in the city administration, $26,000 in savings from employee security, $33,000 in savings in the Police Department from court reorganization, a half-year’s salary for two police officers, public works overtime savings due to a mild winter and a $2,000 savings from the South County Fire Alarm Association in the Fire Department.

Some areas Myers and Tate highlighted as concerns in the general fund include: an auditor’s bill exceeding the city’s budget by $15,000, paying out former Director of Finance Diana Madrid’s $35,486.33 severance package, spending $24,000 on a water-main break and having to postpone other repairs to minimize the effect, no longer having access to free dumping of solid waste, paying overtime to both the Police and Fire departments and paying $5,000 over budget in fuel costs to the Police Department.

For the city’s capital-improvements fund, the report highlights known savings of $20,000 in professional services and $12,000 in salt.

The only concern identified in the report for the city’s capital-improvements fund was slab reconstruction bids over-budgeted by $10,000.

In the city’s park/stormwater fund, the report shows that the city’s aquatic center has sold passes 109 percent above budget and identification cards at 176 percent above budget.

However, because of reduced hours and staff at the city’s Community Center and Recreation Center, the park/stormwater fund has seen drops in those areas. The report shows that the Community Center and Recreation Center have each collected $6,000 less than last year and those figures stand at 57 percent of budget.

Projected savings for the park/stormwater fund are a savings of $10,000 by recommending no stormwater projects, a savings in contractual tree service, savings in part-time salaries for recreation services and savings in uniforms and clothing for those employees.

However, wages for non-exempt employees will be over budget by 10 percent in the park/stormwater fund.

The city also expects to see savings in the year’s second half by decreasing costs in insurance premiums, workers’ compensation premiums, earthquake insurance premiums and cell phones.

“We know that even though we’re doing real well the first half of the year, we should be doing better,” Myers said. “We’re positioning ourself to do even better the second half in terms of spending because there’s some savings that’ll be kicking in the second half of the year like the health insurance and workers’ comp.

“People need to understand one half-year of good financial performance, although positive, does not mean that we’re out of the woods. It takes replicating this over and over and over again. And that’s what we’re committed to doing is exerting the fiscal discipline to bring the city back to strong fiscal health. And this is a positive step in that direction.”