2016/04/11 - Walter's Blog: Budget Expenditures

Democracy on the Front Lines
City Administrator’s Blog
Walter Denton
 
 
April 11, 2016

In previous weeks, I discussed the budget structure and revenues, now I can move on to proposed expenditures in the annual budget. Unlike the federal government, cities cannot budget in a deficit and revenues must meet expenses. Therefore, we are required by law to have a balanced budget. This is more difficult in some years than others, depending on how your revenues are structured.

O’Fallon is more vulnerable to economic downtowns than most cities in the U.S. The largest revenue source in most cities is the property tax, which is consistent and stable. Only 1% of our General Fund comes from property tax, and we rely primarily on the sales tax (44% of the General Fund). Here is a chart that shows where our property tax revenues are allocated:

Sales tax revenues can fluctuate widely from year to year, bringing years of plenty or paucity depending on the regional economy and economic development opportunities. Our sales tax revenue declined dramatically during the 2007-2008 recession, but our revenues have recovered over the past few years. The budget reflects expenditures in all funds of $67,712,710, which are equally balanced by revenues. This represents a decrease of approximately 11% compared to the previous year. The reason for the large decrease is due to the reduced spending in the TIF fund, in particular the $10 million allocated for the St. Elizabeth’s Hospital mine remediation and related projects.

Here is a chart showing our Budget History. The budget fluctuates from year to year due to capital projects:

If you take out capital projects, our budget trend looks like this:

Payroll

The total payroll for all operations, including fringe benefits, is $20,737,170. Payroll is 31% of the total operating expenditures for the entire budget. This budget includes a salary increase of 3%, which is dictated by union contracts. In addition, there is an anomaly in this year’s calendar that includes one extra pay period in calendar year 2016. There are four new positions (including a School Resource Officer which is partially funded by the school district) and six vacancies that will be filled.

General & Administration

General expenses represent 13% of the General Fund budget totaling $2,278,280. This includes $1.67 million in transfers to various funds for bond payments as well as the transfer of $220,000 to a reserve account to be used for projects outlined in our Strategic Plan. The budget also includes an increase of $102,500 for two new sales tax rebate contracts. General expenses reflect a 9% increase over FY2016. Administration expenses represent 7% of the General Fund budget totaling $1,266,410 which represents an 8% decrease over last year’s budget. This decrease is mainly due to the transfer of IT payroll costs to its own department.

Public Safety

The Police Department is the largest budget in the General Fund, totaling $7,400,490. In addition to the new School Resource Officer funded by School District 203, the Police Department budget includes two new vehicles.

EMS is budgeted through a dedicated property tax and totals $2,545,645. This is $48,290 above FY2016 and includes purchases of one vehicle, a heart monitor, and a motorized stretcher.

The Fire Department budget totals $1,953,220, and is funded through a dedicated property tax. The budget includes the purchase of a new vehicle and a radio repeater/receiver that will re-broadcast messages over a higher wattage for better coverage.

Since 911 Dispatch is used by Police, EMS, and Fire, the FY2017 budget includes a new charge of 5% of full time and part time telecommunicator wages and benefits to the Fire Department (Police and EMS have already been paying for 911 services). In Public Safety, there are two vacant police officer positions, one vacant telecommunicator position, and one vacant paramedic position.

Public Works

Engineering staff will be involved in reengineering and rebuilding major arterial and collector roads and intersections, and improving capacities to handle increased traffic volumes in growing parts of the city. New projects for next year include Milburn School Road improvements phase 3, Presidential streets stormwater improvements phase 1, Milburn/Simmons roundabout, W. Hwy. 50 traffic improvements, Exit 14 drainage improvements, and 2nd Street rehabilitation. Drainage improvements from the Public Safety Building to Smiley are covered by Prop S, Water and Sewer.

The Water Fund is budgeted to remain flat this year at $11,167,865. This budget includes water main extensions for Green Mount Road and Union Hill. FY2017 provides for the purchase of a water service truck.

The Sewer Fund is projected to increase 15% from $7,378,300 to $8,514,100. Several sewer projects are planned for FY2017 including the Woodstream sewer main by-pass, Lincoln Farm lift station upgrade, and Wastewater Treatment Plant upgrades. The budget also includes backup generators for lift stations, 8645 Hwy 50 building upgrades, and replacement of a sewer camera with a lateral launch. The Streets, Water and Sewer budgets include the shared purchase of a vactor truck and the rehabilitation of water and sewer at State Street.

Community Development

Quality building and sustainable development are keys to the future of O’Fallon. While we have not returned to our record pace of 2006, housing construction continues to be strong and has stabilized over the past couple of years. New subdivisions include Reserves at Timber Ridge, Bethel Farms, Parkview Meadows and Illini Trails 3rd Addition. Commercial development has also seen an increase with the recent construction of St. Elizabeth’s Hospital, Car Max, Plocher professional building, and the Colonnade expansion. Upcoming projects include the McKendree Athletic Complex on Scott-Troy Road and Academy Sports on Highway 50. The recently completed Downtown Plan has created new energy toward downtown redevelopment and the redevelopment of Old City Hall. Code enforcement and occupancy inspections have also increased as foreclosures and rental activity has increased with the poor economy.

Parks and Recreation

The general Parks budget totals $2,185,315 and continues the department’s terrific recreation programs for all ages. This is a decrease of 5% from FY2016, which included improvements at Hesse Park and Community Park. This year includes the purchase of two vehicles, several mowers and a forklift. The Family Sports Park is entering its ninth full season and $1,317,055 is budgeted for general operations of the park, including maintenance, equipment, and the addition of a new supervisor position to manage the increased activities and tournaments. Major purchases for the Sports Park include a field groomer, mower and utility vehicle.

Summary

O’Fallon is an exciting community and is doing a good job to balance the service demands of historic and new residential neighborhoods, regional shopping and interstate highway development, and newly growing centers of employment. Particularly in our uncertain economy, the demands for resources in such a fast-growing and diverse community are significant and pose significant budgetary challenges. While we strive to manage the growth in our community’s infrastructure, we must also manage the growth and capacity of the organization to maintain the City Council’s high performance expectations. The strong working relationship between City Council and staff in these areas has proven O’Fallon to be a special community.

I would like to acknowledge the hard work of the employees of the City and the special effort of the Management Team in programming and preparing this budget, particularly Finance Director Sandy Evans and Accountant Robin Costello. I would also like to thank the Mayor and City Council for their input that helped to formulate the goals and priorities around which this budget was programmed. We invite your feedback on how we can make the budget presentation more understandable. 

The budget goes into effect on May 1.