South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

Store closings to cost city $287,000 in tax revenue

Ways and Means members hope to avoid using reserves

Crestwood officials estimate the city will lose $287,000 in sales-tax revenue this year due to the closing of two major retailers.

City Administrator Petree Eastman recently told the Board of Aldermen that revised budget projections for 2012 anticipate the loss of $287,000 in revenue from the Barnes & Noble and Sears closings. Other Crestwood businesses that have closed, such as Foot Locker, were not included.

The revised projections anticipate Sears will close April 1, based on speculation that it takes about three months for a business to wind down, according to Eastman.

“We have still not received official word (when Sears will close). That number can change,” Eastman told aldermen Jan. 24. “Certainly, we know that Barnes & Noble is closed, so that’s a fairly firm amount as far as we can tell, but beyond that this is a projection and should be treated as such.”

The original 2012 budget projected a surplus of $85,210 on Dec. 31, 2012.

The revised budget projects a deficit of $177,540 at the end of the year.

Eastman said the best budget estimate has to be made based on information from the state. She also told the board the state is “pretty vague” in what it covers.

“I know that when we were looking at the Sears numbers there were months when they showed no sales, and we knew that obviously was incorrect … This (revised budget) is our best estimate given what we know,” Eastman told the board.

Eastman met with the Ways and Means Committee Jan. 17 and discussed retail closures and loss of tax revenues — specifically Sears and Barnes & Noble.

Ward 3 Alderman Paul Duchild, a Ways and Means Committee member, said the January meeting was the beginning of addressing the city’s budget issues. At the meeting, Duchild asked Eastman to “provide some guidance” on cuts the city would recommend because she is closer to daily operations than aldermen and committee members.

“Nothing’s been done behind the scenes, except, I’m sure, administration working on our requests,” Duchild said.

One way to help with “revenue and expenditure problems,” according to Duchild, is for the Ways and Means Committee to look at the city’s expenditures on a monthly basis.

“Without an extensive review of these expenditures, it is impossible to know how close we may be to cutting actual services that will concern the residents and how close we may be to reviewing our structure and our priorities,” Duchild said.

For the next Ways and Means Committee meeting set Feb. 21, Duchild said he expects to see ideas for cuts and response to his request for the city’s check register.

“It’ll be just continuing down the path of trying to see some transparency with our expenditures, and see if we can’t find some options,” Duchild said.

However, Mayor Jeff Schlink said discussions with Eastman about providing the city’s check register on a monthly basis have been met with resistance.

“The opinion is that there are plenty of policies and procedures to ensure that money is being spent properly,” Schlink said, “and I don’t think anyone suggested it’s not being spent properly, we just want to be able to see (the expenditures) …”

Cash reserves

Ward 1 Alderman Darryl Wallach, who also serves on the Ways and Means Committee, said cash reserves are not being considered at this point to balance the budget, and the committee is waiting for recommended cuts from Eastman.

“(We’ve) just got to take this cautiously … (I) do anticipate there may be some cuts,” Wallach said. “Until the city administrator provides recommendations, (we won’t) have a better grasp as to what recommendations we should make as a city.”

However, Schlink, the third member of the Ways and Means Committee, said the possibility of using cash reserves to balance the budget still is being considered.

He said one of his campaign platforms was that the city would be able to balance its budget without cash reserves, which is his hope for the current budget situation.

“It may be possible that some cash reserves will need to be used … but that’s certainly not the plan or the objective,” he said.

Schlink said the city is trying to be proactive and come up with a plan that uses the least amount of dollars, or zero dollars, from cash reserves.

“We tried to give ourselves a platform where we didn’t take a bad situation and make it worse… Unfortunately, the economy has thrown a curveball and we have to plan accordingly,” he said.

Because January’s sales tax revenue numbers are up, Duchild said he does not anticipate anything happening within the next five months.

“… But you just never know. My personal opinion (is) there’s always something that can be cut … I have ideas, and those’ll come out when we start talking about (the financial situation) in detail …,” he said.

Moving forward

One possible source for increasing city revenue is increasing taxes, but Duchild said he is not ready for that yet.

“I can’t get to that point until I know that we’re running pretty much as tight as possible …,” he said.

Wallach said the city could opt out of the state sales-tax holiday in August or promote Discover Crestwood, a program that works with local businesses to improve business, as “small steps” to aid the budget.

The Ways and Means Committee will try to address the items it knows will affect the budget, according to Duchild.

“We’re going to try to address the issues we know about and try to figure out if we need to make any budget amendments because of these closings,” he said.

Schlink said right now the focus is on the loss of revenue from Sears and Barnes & Noble, but more in-depth discussion will begin at the next Ways and Means Committee meeting.

“The city staff has been going through to see where we can cut. They’re expecting those cuts to come with impacts to services,” he said. “The question is whether or not the citizens would be negatively impacted by those cuts … It’s more than just looking at numbers.”

Schlink said Crestwood is in an unfortunate situation, but the difference between this year and past years is the Ways and Means Committee is actively trying to “partner with city staff to try to make things better for the city staff, as well as residents.”

“Everyone says the economy is doing better. Sales-tax revenues are up slightly, but we’re still in a very cautious time,” he said. “We don’t know if another retailer is going to decide to leave Crestwood. We have to manage the best we can with a dwindling amount of tax revenue coming in.”

More to Discover