Crestwood’s financial picture muddied by upcoming closing of mall anchor

Closing of Dillard’s to result in loss of at least $300,000 to city’s year-end surplus

By BURKE WASSON

While Crestwood administrators still are projecting a surplus in the city’s three major funds by the end of the year, the pending October closure of Dillard’s at the Westfield Shoppingtown Crestwood has muddied those projections.

The administration had projected an overall surplus of $639,445 at the end of the year among the city’s general fund, capital-improvements fund and park and stormwater fund, according to the city’s second-quarter financial report.

But with last month’s announcement that Dillard’s — one of the Crestwood mall’s three anchor stores — will leave the mall by Oct. 20, the city’s administration expects the city will lose $300,000 to $350,000 in sales-tax revenue this year.

That estimated loss of sales-tax revenue from Dillard’s then would drop the city’s expected surplus in its three major funds by the end of 2007 down to anywhere from $289,445 to $339,445.

In the city’s second-quarter financial report, the administration had projected — before hearing that Dillard’s will close — that the city would end the year with a $432,836 surplus in the general fund, an $89,368 surplus in the capital-improvements fund and a $117,241 surplus in the park and stormwater fund.

City Administrator Frank Myers said that despite the unexpected closing of Dillard’s, the fact that the city will add funds to its reserves at the end of the year still is a positive step for the city.

“Even though we know Dillard’s is going to close Oct. 20 and that’s going to affect those numbers, it’s not going to affect those numbers by $432,000 (in the general fund),” Myers said.

“We are going to finish 2007 in a much stronger cash position than we entered 2007 in the general fund. That’s what those numbers show,” he added.

The city’s administration previously targeted a 1-percent-over-budget increase in revenue in Crestwood’s three major funds and an across-the-board decrease of 1 percent in expenditures in all three of those funds.

The city actually was exceeding that goal, according to the second-quarter financial report.

The general fund was expected to have its revenues outperform budget by 2 percent with expenditures expected to finish the year 1 percent under budget. That would result in a $432,836 year-ending performance.

Revenue in the capital-improvement fund was expected to outperform budget by 5 percent while expenditures in that fund were projected to finish the year at 2 percent under budget.

The park and stormwater fund was estimated to rake in 3.3 percent more in revenues than budgeted while expenditures in that fund were set to finish at 2 percent under budget.

Aldermen originally budgeted for a $165,000 surplus in the city’s general fund. In that fund, 59 percent of budgeted revenues for the year had been collected in the first half of the year and the city had spent 49 percent of budgeted expenditures.

By comparison, the city had collected 60 percent of budgeted revenues for the general fund by the halfway point of 2006 and had spent 46 percent of budgeted expenditures in that fund.

In the capital-improvements fund, the city had collected 33 percent of its budgeted revenue for the year by the end of June and had seen 22 percent of budgeted expenditures used.

To compare, the city had generated 49 percent of its budgeted revenue in the capital-improvements fund in the first half of 2006 and had spent 13 percent of budgeted expenditures in that fund.

The park and stormwater fund generated 58 percent of its budgeted revenue for the year at the close of the the second quarter and had used 60 percent of budgeted expenditures for 2007.

In 2006, the park and stormwater fund had collected 61 percent of its budgeted revenue by the end of June and had used 60 percent of the year’s budgeted expenditures.

While true projections for these funds will not be known until after Dillard’s closes, the city already has prepared steps to offset that loss of $300,000 to $350,000 in sales-tax revenue.

Myers has recommended for next year eliminating new employee positions requested in the 2008 budget, cutting plan-ned street projects and canceling a planned stormwater project.

Although he has yet to subtract any lost revenue from Dillard’s, Myers in August presented preliminary 2008 financial projections to the Ways and Means Committee.

For 2008, Myers projects $9,094,154 in general-fund revenue. Expenditures submitted by city departments at that time totaled $8,758,078, which leaves a projected 2008 surplus of $336,076 in the general fund.

That figure of more than $8.7 million in general-fund expenditures factors in the addition of no new employee positions in 2008.

In the capital-improvement fund, Myers projects $1,526,502 in revenue, which is primarily from sales tax.

Expenditures requested are $2,001,514 for a deficit of $475,012.

The park and stormwater fund has projected revenue of $2,177,000 for 2008. Expenditures have been projected at $2,673,191 for a deficit of $496,191.

Park and stormwater fund revenue includes monies from the fund’s sales tax and revenues from the city’s community center and aquatic center.

Because of the anticipated loss of Dillard’s, Myers has said a stormwater project with an estimated cost of “a couple hundred thousand dollars” will be cut.

To allow aldermen more time to review next year’s budget, Myers also recommended an acceleration of the city’s budget schedule.

A draft of the 2008 budget will be presented during the week of Sept. 24 to the Ways and Means Committee instead of its usual time in October.

Myers anticipates the committee will meet during the first week of October to study the budget.

As for the Board of Aldermen, Myers has said he would like to publicly present the 2008 budget at the board’s Oct. 23 meeting, “which will give us three meetings instead of two to do the budget.”

Myers is targeting a first reading of the 2008 budget at the board’s Nov. 13 meeting “or if they’re not ready and need more time, we could have a first reading by Nov. 27 and have a final reading on the budget at the Dec. 11 meeting, which is traditionally when we have the final reading.”