Report shows $453,446 deficit for Crestwood’s major funds

Foote says days of free ride from the city’s mall are over

By BURKE WASSON

While faced with using cash reserves to balance the 2009 budget, Crestwood officials also are keeping an eye on balancing the 2008 budget.

A third-quarter financial report showed that as of Sept. 30, the city had a $453,446 deficit for 2008 across all three of its major funds.

As of Sept. 30, the general fund had collected $7,103,561 in revenue — or 78.81 percent of the 2008 budget’s $9,013,930 projection — and spent $6,823,388 — or 75.94 percent of the 2008 budget’s $8,985,622 projection.

But with transfers of $331,328 to the capital-improvements fund, $89,000 to the park and stormwater fund and $53,282 to the sewer-lateral fund, the general fund as of Sept. 30 had a 2008 deficit of $193,347.

By Sept. 30, the capital-improvements fund had collected $1,705,791 in revenue — or 114.29 percent of the 2008 budget’s $1,492,502 projection — and spent $2,196,762 — or 162.9 percent of the 2008 budget’s $1,348,570 projection. Even with the help of a $331,328 transfer out of the general fund, the capital-improvements fund had a Sept. 30 deficit of $159,643.

On Sept. 30, the park and stormwater fund had collected $1,674,748 in revenue — or 77.45 percent of the 2008 budget’s $2,161,972 projection — and spent $2,012,120 — or 85.92 percent of the 2008 budget’s $2,341,917 projection.

Even with a $237,186 transfer from the general fund, the park and stormwater fund had a Sept. 30 deficit of $100,456.

The $453,446 deficit is a drop from the city’s second-quarter financial report issued on June 30, when the city’s three major funds had a combined $694,600 in revenue over expenditures.

City officials reported in a 2008 first-quarter financial report that Crestwood had a $2,047,549 combined deficit in the city’s three major funds. However, that report was done on a modified-accrual accounting basis while the second-quarter report was done on a cash basis. The modified-accrual accounting method is the same structure used by auditors to track Crestwood’s annual fiscal activity.

Crestwood is budgeted to end 2008 with a $9,825 surplus with the help of transfers between funds. City officials budgeted for the collection of $12,668,404 in revenue and $12,676,109 of expenditures across its three major funds.

The city’s $2.87 million annual-appropriation note approved in October 2006 with Royal Banks contains an Internal Revenue Service provision that limits the city’s general-fund balance to no more than 5 percent of the highest expenditure month during the previous calendar year. Because the city had roughly $525,000 in cash in excess of that 5-percent limitation, those funds went to sooner retire the city’s debt through that note.

While trying to stay within the 2008 budget, city officials have proposed using cash reserves to balance the 2009 budget.

In addition, they are considering retiring the remaining $1.57 million in debt owed on the note with Royal Banks of Missouri.

The city would then use the roughly $550,000 generated each year from the Proposition S tax — approved in April 2006 by voters — to build cash reserves.

But Ward 3 Alderman Jerry Miguel said last week at a Board of Aldermen work session that because balancing the city’s budget is already a struggle, he is concerned about the immediate loss of cash that would come with paying off the debt.

“The negative of paying it off is it reduces our cash on hand,” he said. “So, I would feel a lot more comfortable about doing that, proceeding with the recommended direction, if we could get the deficit down … Get rid of some of the low-hanging fruit, eliminate the position that is on hold in the budget, take another look at the debt-service requirements and again just generally get rid of the other excesses in the budget …”

If anything, Ward 4 Alderman John Foote said aldermen should focus on making residents aware of the city’s financial troubles.

“… Unless this information gets out to the public, the residents of this city are laboring on some real problem areas,” he said.

“We cannot support the city on sales taxes any longer. And the amount of taxes collected in this city on residents is minuscule compared to competitive sister cities who also have sales taxes. The days of a free ride from the mall are over.”