The Sunset Hills Board of Aldermen unanimously approved a $10.9 million budget for 2019, but unlike past years, the city is facing some economic challenges.

The general fund has $8.45 million set aside for expenses with a projected revenue of $8.47 million. The budget has total revenue of $11.19 million and expenses of $11.86 million, including $1 million for existing bond debt and a planned spend-down of $350,715 from the capital fund.

City Administrator Eric Sterman summarized the 2019 budget as balanced on an operating basis, with a small increase in the city’s general reserve fund, allowing Sunset Hills to continue to keep up with its amenities and services to residents.

However, he also cautioned that the city is challenged by declining revenues and an uncertain economic outlook, since most of the city’s revenue comes from sales taxes.

The city’s taxable sales were down nearly $4.9 million from roughly $240 million in 2016 to $235 million in 2017.

The decrease in sales-tax revenue also came before the closure of Toys “R” Us, which may add to the city’s troubles, especially as business at traditional brick-and-mortar stores starts to slow, Sterman cautioned.

The second-largest source of revenue for the city comes from utility taxes, accounting for 16 percent of the city’s earnings. Utility taxes have decreased in recent years. While it is not unusual for utility tax revenue to fluctuate any given year depending on the weather, Sterman attributes part of the drop to milder weather and more energy-efficient products.

The city is also budgeting a 3-percent average merit-based raise for 2019. An additional $35,000 accounts for a 7.5-percent premium increase in health insurance.

The 2018 tax levies on property are .053 cents per $100 valuation on residential property, .054 cents on commercial property, .058 cents on agricultural property and .06 cents on personal property.

Those rates are essentially the same as last year except residential, which rose from .051. Property tax revenue budgeted for 2018 is $126,120 for residential, $55,536 for commercial, $69 for agricultural and $28,391 for personal.

Despite lower revenue intake, the city has seen several new development proposals, including a new development at the former Econo Lodge site. Median household income in Sunset Hills, at $97,273, also continues to rank higher than much of St. Louis County ($59,755) and the state.

Sunset Hills also received a new revenue source in 2018: Money from Proposition P, the sales tax that was passed in April 2017 dedicated toward public safety. It is a half-cent sales tax that is expected to bring in $415,000 for the city by the end of 2018.

As for expenditures, in 2019, the city will be spending about 52 percent of its budget on salaries and benefits, with an additional 21 percent on capital projects and 8.5 percent on debt service. Remaining expenditures include things such as building maintenance, supplies and professional services, said Sterman. Most expenditures are paid for out of the general fund, accounting for 68.4 percent of all expenditures in the 2019 budget, paying for things such as salaries and benefits for city employees.

The capital improvement fund, with budgeted expenses of $1.42 million, will fund repair work for the Mentz Hill Acres bridge ($110,000), sidewalks on Lindbergh Boulevard between East Watson and Eddie & Park Road ($242,000) and six new dash cams and seven new bullet-resistant vests for the Sunset Hills Police Department ($42,300).

One of the projects the city put off due to lack of funds is a planned $150,000 renovation to City Hall.

Ward 3 Alderman Nathan Lipe requested an amendment to set aside $185,000 slated for new lighting at the athletic complex and use it for the city’s sidewalk construction fund instead.

“I was hoping we could take the $185,000 and at least start the project to get a sidewalk in,” said Lipe, who wants a sidewalk along Leebur Drive.

However, the board convinced him to move forward with the budget, with the promise to revisit the issue about the sidewalk along Leebur Drive in the new year.