2017/04/13 - Walter's Blog: Budget Expenditures
April 13, 2017
In previous blogs, 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 $81,266,735, which are equally balanced by revenues This represents an increase of approximately 20% compared to the previous year. The reason for the large increase is due to the Destination O’Fallon capital projects, which is an economic development initiative including a new Downtown Plaza and expansion of the Family Sports Park.
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:
Here is a chart that shows where General Fund expenses are allocated:
Payroll
The total payroll for all operations, including fringe benefits, is $21,647,245. Payroll is 27% of the total operating expenditures for the entire budget. This budget does not include any salary increase. The contracts for all the City’s four collective bargaining units (FOP sworn officers, FOP civilians, AFCSME, and Laborers) expire on April 30, 2017 and new agreements have not been approved. There are seven new positions: two police officers, a part time city clerk assistant, a paramedic, a facility grounds turf assistant, a horticulture and urban forestry assistant and a grounds specialist.
General & Administration
General expenses represent 13% of the General Fund budget totaling $2,144,955. This includes $1.87 million in transfers to various funds for bond payments as well as the transfer of $200,000 to a reserve account to be used for projects outlined in our Strategic Plan. This budget also includes a decrease of $172,000 due to the fulfillment of the Azavar utility auditing contract. General expenses reflect a 6% decrease from FY2017. Administration expenses are 7% of the General Fund budget totaling $1,302,025 which represents a 3% increase over last year’s budget.
Public Safety
The Police Department is the largest budget in the General Fund, totaling $6,723,905. In 2016, the state mandated a reduction in 911 Dispatching Centers. In response to that mandate, Fairview Heights has consolidated with O’Fallon for 911 service. O’Fallon has already been providing dispatching service to Shiloh for several years. A new department, Combined Dispatch, has been created to gather all Telecommunicator personnel, operating, and IT costs related to managing the dispatch center. A partnership has been negotiated with Fairview Heights to help offset the increased costs. The Police Department budget includes two new vehicles and two additional officers.
EMS is budgeted through a dedicated property tax and totals $2,570,815. This is $25,170 above FY2017 and includes purchases of a heart monitor and narcotics safe for the ambulance. The EMS budget includes a new paramedic.
The Fire Department budget totals $1,955,410, and is funded through a dedicated property tax. The budget includes increased personnel costs to cover daytime duty shifts and the purchase of a thermal imaging camera.
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 the Green Mount Road expansion, 2nd Street rehabilitation, Ashland extension (phase 1), Milburn School Road (phase 3), Highway 50 resurfacing, Presidential streets stormwater improvements (phase 2) and Regency Park reconstruction. Plans for Presidential Streets stormwater improvements (phase 2) is a major project covered by Prop S and Sewer.
The Water Fund is budgeted at $11,081,075. This is a slight decrease from last year. This budget includes water main extensions for Simmons and Bethel Roads. FY2018 provides for the purchase of a flatbed truck, a truck with liftgate, a pick-up truck and a water exerciser.
The Sewer Fund is projected to increase 8% from $8,514,100 to $9,189,235. Several sewer projects are planned for FY2018 including the Woodstream sewer main by-pass, Augusta/Smiley sewer replacement, West Highway 50 mine subsidence sewer main replacement and WWTP upgrade phase 2. The Streets, Water and Sewer budgets include the shared purchase of two dump trucks, and a front-end loader.
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 Illini Trails, Parkside Estates, Bethel Farms, Augusta Greens, the Enclave at Augusta Greens and Lincoln Park Villas. Commercial development has also seen an increase with the recent construction of St. Elizabeth’s Hospital, Skyline Community Church and the planned construction of the Marriott Towne Place Suites. The recently completed Downtown Plan has created new energy toward downtown redevelopment such as the new Bike Surgeon store and the Old City Hall renovation.
Parks and Recreation
The general Parks budget totals $2,393,650 and continues the department’s terrific recreation programs for all ages. This is an increase of 10% from FY2017 and includes a fire pit pavilion at Rock Springs Nature Center, Hesse Park improvements to field 10, and purchase of two trucks and two mowers. There are two new positions in the budget for a Horticulture and Urban Forestry Assistant and Facility and Grounds Specialist, who will coordinate landscaping at all City facilities and will replace current contracted landscaping services.
The Family Sports Park is entering its tenth full season and $2,953,665 is budgeted for general operations of the park, including maintenance, equipment, and the addition of an athletic field maintenance specialist to manage the new fields planned with Destination O’Fallon. Major purchases for the Sports Park include soccer goals and bleachers and lights for the latest fields. There is one new position for an Athletic Field Maintenance Specialist, who will maintain the new Destination O’Fallon turf fields.
A new department, Community Special Events, has been created to manage events planned at the new multi-purpose Downtown Plaza as part of Destination O’Fallon.
Capital
Destination O’Fallon is a new economic development initiative that is an investment in the O’Fallon community. It will benefit our businesses, spur economic growth, support the youth and families of our community, and help us realize the vision we all share for a successful and prosperous O’Fallon. The project includes approximately eight new all-weather fields at the Family Sports Park that will attract regional and national tournaments and a multi-purpose community plaza in the heart of downtown O’Fallon. The budget includes $9.6 million for this project.
Summary
Local revenue sources are improving and this budget does not contain any major cuts in programs or expenditures. We would be more optimistic but the budget crisis in the state government has the potential to significantly affect this budget and the City’s services.
Many of the priorities in the Strategic Plan are addressed in this budget and the City continues to implement projects listed in the Plan. In particular, we are excited about the new Destination O’Fallon projects at the Family Sports Park and Downtown O’Fallon that draw visitors to the community and generate additional economic activity. It is anticipated that Destination O’Fallon could bring $10 million in economic impact to O’Fallon.
O’Fallon employees are 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.
The new budget goes into effect on May 1.