Sales-tax shortfall prompts Crestwood aldermen to consider reining in ’08 spending

Bland ponders if workshop should be set to discuss ways of balancing ’08 budget


With sales-tax revenue falling below September projections, Crestwood aldermen last week expressed concern that city officials should rein in 2008 spending before approving the 2009 budget.

Ward 3 Alderman Jerry Miguel reported to the board that September sales-tax revenue was roughly $200,000 less than projected.

“We did recently receive a sales-tax revenue report for the month of September,” Miguel said. “That sales-tax report put us at the ninth-month period for the first three quarters of the year … That revenue that we collected in September was $200,000 below what was projected. So while we were above and over budget after six months by roughly $30,000, after nine months we are now roughly $140,000 below budget.

“And projecting that out in view of what has happened in the financial markets in the last two weeks, I think, puts the projections of the last three months in a somewhat tenuous position. So hopefully, our projections will hold for the last three quarters of the month … In discussing the matter with the city administrator (Jim Eckrich), I think we both agree that in the absence of any ability to explain the September shortfall, we need to wait and see what the October numbers look like because there have on occasion been some lags in there in which the revenue shortfall was made up in the subsequent month. Frankly, not shortfalls of this magnitude. But there have been some instances where the revenue shortfall has been made up in the subsequent month. If that doesn’t happen, then we are looking at a shortfall in the $140,000 to $200,000 area.”

Additionally, Ward 1 Alderman Richard Bland pondered whether the board should schedule a work session to discuss ways of balancing the city’s year-end budget for 2008.

“It’s great to be able to identify these issues,” Bland said. “I guess my question would be, and this is to the board, what is the action item going to be or the action items going to be? Quite frankly, sitting back and waiting for another month and hoping that things get a whole lot better, I don’t think, is the appropriate action item. I don’t think this should come as a surprise. I think what we do need to do is come together as a board and possibly have a work session and take a look at these budget shortfalls and see what exactly it is that we’re planning on doing.

“We’re now starting to see some of the things that, quite frankly, I expected to see,” he added.

A presentation of city finances made during an April 30 town-hall meeting showed that while expenditures of $12,676,109 are projected for city services in the 2008 budget, officials at that time believed “the city may not have enough revenue to cover those expenditures.”

City officials have said that if the city can’t collect the revenue this year to pay for expenses, the city’s cash reserve would be utilized.

While Mayor Roy Robinson estimated in May that the city had $3.5 million to $4 million in cash on hand, Miguel estimated in July that the city had roughly $5.5 million in cash on hand.

Because of these budget shortfalls feared for 2008 and beyond, aldermen asked residents to approve a six-year, 35-cent tax-rate increase in the Aug. 5 election. But roughly 72 percent of voters rejected Prop 1, which would have generated an additional $1.1 million per year.

With that additional revenue rejected by residents and sales-tax revenues continuing to decline, Bland told aldermen last week expenses might have to be cut between now and the end of the year.

At the very least, he hopes that aldermen will “come together” to review the city’s financial needs.

“We’re right now, I guess, praying and hoping that winter is a mild one because salt prices went up,” Bland said. “And we’re not alone in that respect. My hometown put salt out for bid and received no bids. So they’re going to have to use a hybrid project. But we had to cut costs there. Now we’re talking about budget shortfalls. Well, budget shortfalls mean we’ve got to cut something somewhere. So I think we as a board need to start coming together and start taking a look at what things we are going to put aside.”

“We will do that during the budget process,” Robinson said. “… The Ways and Means (Committee) will be recommending things to the board.”

“I appreciate that for ’09 and ’10,” Bland said. “I’m talking about these shortfalls that we’re looking at right now toward the end of this budget year. Maybe we need to sit down and we need to as a board come together and make some decisions.

“I hate to say it, but I think we’ve been a little bit diverted the last couple of months and maybe we took our eye off the ball a little bit. And these are things we should have been taking a look at all along, and we haven’t been. And I think now is the time when we need to come together and we need to really work toward figuring out how we’re going to keep this city running and still be able to provide the services that we say we’re going to provide and somehow be able to deal with these financial challenges.”

Miguel also emphasized that he wants city officials and aldermen to keep three areas in mind — the 2009 and 2010 budgets, the possibility of having cash balances in excess of a federal limit placed on the city’s debt-service note with Royal Banks of Missouri and the formation of a new pay plan for city employees.

“I think we also need to take a real close look at 2010 as well as 2009,” he said. “And once the 2009 budget is developed, I think that it’s reasonably easy to project 2010. And I think that’s important because the people of the city recently told us that at least at this point that they are not about to increase our revenue, at least through property taxes.

“The second item I would like to mention is Prop S. The board needs to start thinking of what we may want to do if there are any excess revenues. The issue came up a year ago. Again, I’m aware that the administration has been working on identifying the amount of funds that the city will have available. We also need to start thinking in terms of what we want to do with that excess cash.

“The third item I’d like to mention is a pay plan. Again, I appreciate that the administration is totally bogged down with preparing the budget. But in order to achieve equity across the city across all departments in the city, we really need to know where we stand on a competitive basis. I don’t know how to really address any other inequities other than by having at least comparable salaries to look at. And it needs to be something that needs to be attended to fairly soon.”

The city still uses some components of its pay plan, which was established in 2002, for employees’ starting salaries.

Because city officials said that merit-based system could not be afforded, it was shelved after the 2005 fiscal year.