By Gloria Lloyd
Staff Reporter
news3@callnewspapers.com

Sunset Hills’ 2018 budget is stable, just as City Administrator Eric Sterman described last year’s budget.
The $13.4 million budget, up from $10.6 million last year, is balanced on the operating side with a $5,000 surplus. It gives employees a 3-percent average merit raise and raises the salaries of officers in the Police Department with funds the city will receive from Proposition P, the new countywide sales tax for police and public safety.
In Sterman’s memo to the Board of Aldermen, he noted that the city’s budget maintains current service levels and invests in capital infrastructure, spending down $354,800 from the capital improvement fund after a series of delayed or under-budget projects left a balance up to $1 million more than anticipated in the fund.

Aldermen unanimously approved the budget with no discussion Dec. 12.
The discrepancy between last year’s budget and this year’s is primarily from an increase in debt-service payments due this year. The city refinanced and retired debt in 2016 to obtain lower interest on its remaining debt from the certificates of participation, or COPs, issued in 2009 to build the Community Center and Aquatic Center.
This year the city will fund $2 million toward that debt, up from $500,000 last year. The city will also receive $1.2 million in grants, up from $760,000 last year. Total budgeted operating funds not counting grants is up roughly $300,000 from last year, from $7.6 million to $7.9 million, primarily due to the addition of an estimated $400,000 from Prop P.
Overall, the city spends 51.8 percent of the budget on salaries and benefits and 18 percent on capital projects, along with 9 percent on debt service.

The most money goes to the Public Works Department at 34 percent of the budget, followed by the Police Department at 32 percent, Parks and Recreation at 26 percent, Administration/Finance at 7 percent and courts at 1 percent.
The city projects to add money at the end of 2018 to the general fund reserve, which stands at roughly 85 percent of the operating budget.
Health insurance premiums rose 14 percent this year, but the extra $49,000 that will cost the city is offset by the 33-percent decrease in premiums last year. Premiums are lower than in 2015 and past years.
Retirement contributions have increased to 3.9 percent from 3.5 percent for police and to 6.2 percent from 5.5 percent for all other employees.
Major projects that carry over from last year include the $70,000 complete rewrite of city zoning code, $250,000 for East Watson Road sidewalks, $250,000 for headwall replacements and $111,000 for Hadley Hill.
Sterman granted salary hike
Aldermen unanimously voted in closed session the same night they approved the budget to give Sterman a 5-percent raise from his $92,500 base salary, which hikes his 2018 salary to $97,125. He made $90,000 when he took the job in July 2016.
In a memo outlining key aspects of the budget, Sterman noted that the city’s economic outlook, revenues and expenses are all stable. The city is mostly funded by sales taxes, and stores in the city have increased their incoming sales tax by 1 to 5 percent in the last several years. Taxable sales hit nearly $240 million in 2016, up from $230 million in 2015 and $200 million in 2010.
With the city’s attractive location near interstates and strong demographics, Sterman predicts that growth will continue, barring a national recession or other economic calamity. The city’s median income was $97,273 in 2015, much higher than the county at $59,755 and the state at $48,173.
New development proposals along the economic engine of the Lindbergh, Watson and Gravois corridors indicate the city’s continuing economic strength, Sterman said.
New businesses that opened last year include two new cell-phone stores, Walnut Grill in the former Ruby Tuesday and Extra Space Storage in the former Color Art building on Watson Road. The Sheridan at Laumeier, an 81-apartment high-end senior living facility, opened at the site of formerly abandoned condos on Rott Road next to Laumeier Sculpture Park.
Sunset Hills has over 500 businesses, including big-box stores with heavy sales at the cash register. It has one of the highest rates of sales tax per capita among cities in the county.
The city is the world headquarters of Fortune 1000 company Panera Bread, which is known as St. Louis Bread Co. locally and has 370 employees in Sunset Hills. Other large employers in the city include Mercy Healthy System with 400 employees, ADP with 205, St. Anthony’s Medical Center with 190, Janitron with 175 and New Balance with 170. The city has one of the lowest unemployment rates in the St. Louis area and is below the state and national average.
Assessed valuation increased 8.5 percent last year to $395 million from $364 million. The city should remain a desirable place to live in the future because of its “convenient location, excellent park system, low crime rate, and the award-winning Lindbergh School District,” Sterman said.
Study calls for pay changes
The budget is the first to implement findings presented to aldermen Nov. 28 from a study the board commissioned to examine the city’s rates of pay compared to similar cities in the region.
Consultant CBIZ Inc., represented by Sunset Hills resident Joe Rice, found that the city underpays some workers and overpays others, and the Police Department needs higher salaries to keep up with the market.
The company has examined compensation at cities across the county in the wake of county voters’ passage of Proposition P, which the county is using to ramp up the salaries of officers in the St. Louis County Police Department and many cities are using to increase officers’ salaries.
Aldermen already promised to use the estimated $400,000 the city is set to receive on increasing officer pay, and the study reinforced that commitment, Sterman said.
“We’re basically able to get our Police Department fully to market, to those ranges, and still have money left over,” Sterman said.
The study found that the city has 18 employees making salaries below the recommended minimum range, which could be solved with $52,000 that is included in the 2018 budget. The study also found that five employees are making salaries above the maximum recommended range, or $63,000 over the recommended range.