2022/05/05 - Walter's Blog: Budget Expenses

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 our revenues and the state of the economy. 

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. The City Council recently eliminated the property tax levy for the General Fund, 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. As mentioned above, the City Council recently reduced the property tax levy and increased the sales tax by ½%. 

The budget reflects expenditures in all funds of $104,707,382, which are equally balanced by revenues. This represents an increase of approximately 14% compared to the previous year. The reason for the increase is due to building reserves for the newly established Build O’Fallon Trust Fund and scheduled capital projects (primarily for improvements at the Wastewater Treatment Plant). Operational spending increased 20% over last year mainly due to professional studies for the implementation of the newly approved 2040 Master Plan. 

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 where all expenses are allocated: 

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

Expenditure Highlights 

Payroll 

The total payroll for all operations, including fringe benefits, is $25,401,355. Payroll is 24.2% of the total operating expenditures for the entire budget. There is one new part-time Planning Intern position for Community Development. 

Administration 

Administration expenses are 7% of the General Fund budget totaling $1,936,632. Administration is composed of the City Council, Administration, Finance, Human Resources, and the City Clerk’s Office. There are no new positions in this year’s budget, but a new Payroll Specialist was added during the 2021-22 budget year. 

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 Downtown District revitalization. The primary focus this year is to begin implementation of the newly approved 2040 Master Plan. In particular, guidelines will be established for neighborhood district nodes or “neighborhood hubs” that will support the Master Plan’s goal to enhance quality of life and walkability in O’Fallon. 

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) and the Downtown District. Capital projects include gateway signs and batting cages for the Family Sports Park. 

Information Technology 

The Information Technology budget is $1,968,242, an increase of 13.5% to FY2022. This budget includes office furnishings, mobile and desk top computers, network equipment, and cameras. Reserves in $230,000 will be used to purchase additional data storage and a new phone system. 

Parks and Recreation 

The general Parks budget totals $2,364,817 and continues the department’s outstanding recreation programs for all ages. This is a decrease of 9.8% from FY2022 due to a reduction in expenses from the merger of the Kixx soccer club with Metro East Legacy. Revenues include a new ¼% sales tax that replaces the Park Fund property tax. Two Park projects in this year’s budget will be funded through the Build O’Fallon Trust Fund: a new all-abilities playground at Community Park, and a design contract for the replacement of the Community Pool. 

With the Family Sports Park entering its 16th full season, there are major tournaments scheduled for soccer, baseball, and softball. $1,717,276 is budgeted for general operations of the park, including maintenance and equipment. Projects for the Sports Park include a new truck and bobcat and improved wi-fi network for point-of-sale concession services. 

A new Community Special Events department has been created to manage events planned at the new O’Fallon Station multi-purpose center. The highly successful Vine Street Market will continue for its fourth year and other events will help stimulate the Downtown District. 

Public Safety 

The Police Department is the largest budget in the General Fund, totaling $8,126,115. The budget includes three new vehicles, cameras, tasers, and a reserve amount for future capital expenses. The Combined Dispatch Center (MECOMM) totals $1,361,218 and makes up 5% 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 $3,392,529 which includes the purchase of three new chest compression systems and a new ambulance and stretcher. This is $200,213 more than FY2022. 

The Fire Department budget totals $1,890,240 and is funded through a dedicated property tax. This budget includes purchase of general equipment and minor improvements to the training grounds. 

Public Works 

The Public Works Department is the largest budget in the City of O’Fallon and consists of Streets/Stormwater, Water, and Sewer. The primary feature of the Streets budget is $1.7 million for the Pavement Management Program, a multi-year initiative to improve O’Fallon’s streets. In addition, the budget includes the continuation of the Presidential Street reconstruction program with the West Presidential Streets Phase 2 and 3 improvements. Stormwater improvements include the Cambridge Blvd and Westbrook drainage improvements. Engineering services are included for future projects such as Central Park/Harman Lane, Ogles Creek trail, and Lincoln streetscape. Purchase of small equipment include a boom mower, dingo, truck lift, and asphalt roller. 

The Water Fund is budgeted at $15,505,351. This is a 12.5% increase from last year, primarily due to capital projects and maintenance. This budget includes water main replacements for Union Hill and Longacre and Ashland. 

The Sewer Fund is relatively flat to prior year. The $13 million Wastewater Treatment Plant expansion is the largest project and has carried forward from FY2022 due to delays in state funding approval. The budget also includes purchase of a single axle dump truck, vactor truck, and a boom mower all shared with other departments. Projects include the W Presidential Streets phase 2 and 3, south trunk phase 1, and continuation of the sewer lining program. 

Summary 

The City of O’Fallon has recovered well from the COVID-19 crisis. Reductions in the Hotel/Motel Tax and Food/Beverage Tax have rebounded, and the local economy appears to be strong. 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. 

We are living in an extraordinary time, and I would like to acknowledge the hard work of City employees who provide outstanding services under difficult circumstances. I would also like to thank the Leadership Team in programming and preparing this budget, particularly Finance Director Sandy Evans and Senior 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. The strong working relationship between City Council and Staff in these areas has proven O’Fallon to be a special community.