2019/04/10 - Walter's Blog: Budget Expenditures
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 2% of our General Fund comes from property tax, and we rely primarily on the sales tax (42% of the General Fund).
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 2007-2009 recession, but our revenues have recovered over the past few years. The budget reflects expenditures in all funds of $83,968,042, which are equally balanced by revenues. This represents an increase of approximately 12% compared to the previous year. The reason for the increase is due to scheduled capital projects, primary for improvements at the Wastewater Treatment Plant.
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 $23,788,924. Payroll is 28.3% of the total operating expenditures for the entire budget. This budget includes 3% salary increases, which are stipulated in the City’s collective bargaining agreements. There are six new positions in the budget: one telecommunicator, three paramedics, one fleet mechanic and one code enforcement officer.
Administration
Administration expenses are 7% of the General Fund budget totaling $1,420,526 which represents a 4% decrease over last year’s budget. Administration is composed of the City Council, Administration, Finance, Human Resources, and the City Clerk’s Office.
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. FY19 began a new policy of requiring the developer to reimburse the city for costs of traffic studies. New subdivisions include Reserves at Timber Ridge, Bethel Ridge Farm, Parkview Meadows, and Park Bridge Station. Commercial development has also seen an increase with the recent construction of three new hotels and the development of the Rieder Road corridor. A new Code Enforcement Officer is in the budget to keep up with the growth of inspections in the community.
Economic Development
In response to the City Council’s priority to strengthen economic development, the Economic Development budget is intended to strengthen and grow the local economy, attract visitors, and improve the business climate. New projects include marketing strategies for the Rieder Road corridor (I-64 Exit 21), the Green Mount Road corridor (I-64 Exit 14), and the Downtown District. Capital projects include gateway signs, Downtown District wayfinding and parking signage, and lights for the new ballfields at the Family Sports Park.
Information Technology
The Information Technology budget is $1,789,760, up 1.8% from FY2019. More than 79% of the increase is due to capital projects: a systemwide Security Assessment, Cityworks Public Access software for Community Development, fleet routers for Fire and EMS, City Council Chambers technology improvements, and O’Fallon Station security cameras.
Parks and Recreation
The general Parks budget totals $2,591,924 and continues the department’s outstanding recreation programs for all ages. This is an increase of 3% from FY2019 and includes the Cavins Community Center painting and roof replacement, a mulch wagon, a bobcat and some capital reserves for future expenses.
With the Family Sports Park is entering its twelfth full season, there are 9 major soccer tournaments scheduled and 39 total events including the soccer, baseball, and softball fields. $1,545,711 is budgeted for general operations of the park, including maintenance and equipment. Major purchases for the Sports Park include resurfacing the trail and parking lots, replacing the baseball field warning tracks, lights for Fields 9 and 10, and the purchase of a mower, awning, and picnic tables.
A new Community Special Events department has been created to manage events planned at the new O’Fallon Station multi-purpose center. The plaza is complete and plans to run community events such as the Vine Street Market and other festivals.
Public Safety
The top City Council priority for this budget continues to be Public Safety. The Police Department is the largest budget in the General Fund, totaling $7,332,963. The budget includes three new vehicles and a reserve amount for future capital expenses. The Combined Dispatch Center (MECOMM) totals $1,252,324 and makes up 6% of the General Fund budget. One new telecommunicator position is included in this budget to enable MECOMM to continue to provide outstanding dispatching services to first responders. MECOMM provides 911 dispatching for Shiloh and Fairview Heights through intergovernmental agreements that help reduce costs.
EMS is budgeted through a dedicated property tax and totals $3,306,859. This is $286,039 above FY2019 and includes the mobilization of a third ambulance and the hiring of three new paramedics to provide transfer services for the two local hospitals. If the transfer program does not proceed, then Staff will review the need for the new paramedics.
The Fire Department budget totals $2,112,221 and is funded through a dedicated property tax. The budget includes increased personnel costs for night-time coverage and the final payment for a replacement fire truck.
Public Works
Public Works (including streets, water, sewer, and stormwater) also are City Council priorities for this budget. The primary feature of this is $1.7 million for the new Pavement Management Program, a multi-year initiative to improve O’Fallon’s streets. Additional street and stormwater improvements include: Simmons Road reconstruction, Presidential Streets Phase 4 improvements, Holliday Drive drainage improvements, Misty Valley drainage improvements, and the final phase of the PSB to Smiley drainage program. 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 O’Fallon. One new fleet mechanic is included in this budget to assist our current mechanic in maintaining the City’s equipment and vehicles from all departments.
The Water Fund is budgeted at $14,605,009. This is an 8% increase over last year, primarily due to capital projects. This budget includes water main replacements for Southview Gardens, Mark Drive, and Union Hill. Water tower maintenance and a mini excavator are also in the budget.
The Sewer Fund is projected to increase 82% from $10,973,763 to $19,964,717. Nearly all of this increase is for the Wastewater Treatment Plant expansion, which is a multi-year project totaling more than $8 million. Other sewer projects include Southview Gardens sanitary sewer lining, Woodstream trunk main replacement, Presidential Streets Phase 4, North Oak, Rieder Road sewer extension, and East State Street sewer extension. The Streets, Water and Sewer budget include the shared purchase of two replacement trucks and a single-axle dump truck.
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 continuing budget crisis in the state government has the potential to significantly affect this budget and City services. As noted above, 16% of our General Fund revenues come from the State Income Tax and Use Tax. If additional reductions are made by the state government, the City Council will need to revisit this budget to consider additional spending cuts. Despite the uncertainty, the budget is balanced and meets the needs, goals and demands of the City in all service areas.
O’Fallon employees are doing a great 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.