2021/05/24 - Walter's Blog: Budget Expenses

Democracy on the Front Lines

City Administrator’s Blog

Walter Denton

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 (45% 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. We made numerous cuts in last year’s budget due to the COVID-19 pandemic, but we have restored most projects and line items in this budget.

The budget reflects expenditures in all funds of $91,911,064, which are equally balanced by revenues. This is an $8 million increase over last year, primarily due to $10 million in 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 how the non-capital expenses are spent:

Here is a chart that shows where General Fund expenses are allocated:

Payroll

The total payroll for all operations, including fringe benefits, is $25,019,763. Payroll is 27.4% of the total operating expenditures for the entire budget. There are two new positions in the budget: converting IT Technician II from part-time to full time and merging two Library part time positions into one full time position titled Public Service Lead. There are five new positions that were included in last year’s budget but were not filled due to revenue shortfalls from the pandemic: Senior Planner, Utility Supervisor, Park Maintenance Supervisor, Part-time Records Clerk, and Part-time Lab Assistant. Those positions were carried over into this year’s proposed budget.

Administration

Administration expenses are 6% of the General Fund budget totaling $1,382,864 which represents a 40% reduction from last year’s amended budget. Fiscal year 2021 included payout of $750,000 in Local CURES Act funds that were given as COVID relief grants for local small businesses. 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. Housing construction continues to be strong and has stabilized over the past five years. Commercial development has also seen an increase with the recent construction of three new hotels and the development of the Rieder Road corridor. The primary project this year is the implementation of the Master Plan where we engaged the community on what they want O’Fallon to look like over the next 20 years.

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. Economic Development revenues declined dramatically this year due to the pandemic and most projects were cut or deferred. This proposed budget carries over most of these projects, including ballfield lights and new turf infields at the Family Sports Park. The budget also includes improvements for the Rieder Road corridor (I-64 Exit 21) and the Downtown District.

Information Technology

The Information Technology budget is $1,733,324, relatively flat to FY2021. There are no major capital projects in this budget, but IT will continue its mission of customer service and network security.

Parks and Recreation

The general Parks budget totals $2,620,646 and continues the department’s outstanding recreation programs for all ages. This is an increase of 2.3% over FY2021 and includes improvements at Hesse Park, Community Park, and Rock Springs Park, a truck, and other minor pieces of equipment.

Many events at the Family Sports Park were cancelled over the past year due to the pandemic, but we are anticipating a full schedule of major tournaments next year for soccer, baseball, and softball. $1,541,050 is budgeted for general operations of the park, including maintenance and equipment. Major projects for the Sports Park include new synthetic turf infields, ballfield lights, Splash Pad rehabilitation, and playground equipment. A grant has been submitted for a fieldhouse, but that will not be completed unless the grant is received.

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 $7,800,538. The budget includes two new vehicles, ballistic vests, and a reserve amount for future capital expenses. The Combined Dispatch Center (MECOMM) totals $1,337,006 and makes up 6% of the General Fund budget. 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 $3,192,316 which includes the purchase of a new ambulance. This is $104,925 less than FY2021. The Fire Department budget totals $1,825,798 and is funded through a dedicated property tax and includes a new 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 Pavement Management Program, a multi-year initiative to improve O’Fallon’s streets. Additional street and stormwater improvements include Venita Drive reconstructions, West Presidential Streets Phase 1 improvements, Cambridge Blvd drainage improvements, and the Glen Hollow culvert replacement. 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.

The Water Fund is budgeted at $13,786,085. This is a 4.9% decrease from last year, primarily due to fewer capital projects.

The Sewer Fund is projected to increase 57.6% from $17,127,078 to $21,590,567. Nearly all this increase is due to the funding of the Wastewater Treatment Plant expansion over multiple years (totaling almost $10 million). Other sewer projects include the Woodstream bypass, West Presidential Streets Phase 1, Rieder Road lift station, and continuation of the sewer lining program.

Summary

The COVID-19 crisis caused profound changes to our operations and revenues, but we were able to continue all operations and services. Our employees have performed admirably, and they displayed exceptional flexibility and perseverance through the various shutdowns and restrictions.

However, this budget does not contain any major cuts in programs or expenditures. We are living in extraordinary times, and we will rely on the strong working relationship between City Council and Staff to manage this crisis. I would like to acknowledge the hard work and special effort of the Leadership 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.