2024/04/08 - Walter's Blog: Budget Expenses

Budget Expenses

April 8, 2024 

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 has increased in recent years, but a new proposal to eliminate the sales tax on grocery items would reduce our revenue by $1.2 million. If this approved, the City Council would have to revisit the budget to determine how to address for the shortfall. 

The budget reflects expenditures in all funds of $135,965,821, which are equally balanced by revenues. This is an increase from last year’s budget but is mostly due to capital projects, particularly the new pool and other Community Park improvements. 

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 revenue comes from: 

Here is a chart that shows where expenses are allocated: 

Expenditure Highlights: 

Payroll 

The total payroll for all operations, including fringe benefits, is $29,410,440. Payroll is 21.6% of the total operating expenditures for the entire budget. New full-time positions include: two Streets Maintenance Workers, one Telecommunicator, one Park Specialist, and one Circulation Assistant for the Library. Also included in this budget are current positions of a Code Enforcement Officer and IT Help Desk Technician, both converted from part-time to full-time. 

Administration 

Administration expenses are 5% of the General Fund budget totaling $1,846,470, which represents a 14% decrease from last year’s amended budget. This decrease is mostly due to the dismissal of a potential reporting penalty and reallocating unemployment compensation to other departments. Increases are reported in computer services for budget software and the Resident Assistance Program instituted last year for citizens who have difficulty paying Ameren utility bills. 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. Both housing and commercial construction continue to be strong and have stabilized over the past two years. Converting a part-time code enforcement officer to full-time employment is included in this budget to keep pace with increasing code enforcement complaints. 

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. Projects include additional gateway signage and a new façade program designated for businesses and residents located in the west side of O’Fallon. 

Information Technology 

The Information Technology budget is $2,173,293, an increase of 7% compared to FY2024. This increase includes a change in one IT Help Desk Technician from part-time to full-time, repaving the IT parking lot, and a CivicPlus software upgrade. An upgrade of City Hall’s data center storage unit is planned for this year using capital reserve funds set aside from the prior year. 

Parks and Recreation 

The general Parks budget totals $3,558,348 and continues the department’s outstanding recreation programs for all ages. This is an increase of 28.2% from FY2024. Revenues include the ¼% sales tax that replaces the Park Fund property tax put in place last fiscal year. Increase in personnel costs include a new full-time position shared with the Family Sports Park and seasonal employees earning $1/hour more each January through 2026. Park projects and equipment in this year’s budget include implementation of new software, a new F250 truck, fencing around the new All-Abilities Playground, furnishings for the new office building, and toro mowers and a dingo shared with the Sports Park. 

The Community Park Enhancement Project will be constructed this year, including a new pool, performing arts stage, Cavins Community Center, and outdoor event space. Construction will begin over the summer and be complete in 2025. 

With the Family Sports Park entering its 18th full season, there are major tournaments scheduled for soccer, baseball, and softball. $3,090,525 is budgeted for general operations of the park, including maintenance and equipment. In addition, the highly successful Vine Street Market will continue for its sixth year and other events will help stimulate the Downtown District. 

Public Safety 

The Police Department is the largest budget in the General Fund, totaling $8,926,287. The budget includes seven replacement vehicles (two are carried forward from last fiscal year) and camera upgrades for the booking rooms. The Combined Dispatch Center (MECOMM) totals $1,672,133 and makes up 4.7% of the General Fund budget. MECOMM provides 911 dispatching for Shiloh and Fairview Heights through intergovernmental agreements that help reduce costs. One additional full-time telecommunicator is included in this budget to keep up with increasing call volume and to alleviate overtime costs. 

EMS is budgeted through a dedicated property tax and totals $3,943,895. This is $305,767 more than FY2024. This budget includes a new quick response vehicle, advanced cardiac monitor, and three motorized stair chairs. 

FY2025 includes the roof and HVAC system replacement at the Public Safety Facility from last year’s budget due to equipment delays. The Police and EMS departments will each apply $300,000 of their capital reserves toward these repairs. 

The Fire Department budget totals $2,255,450 and is funded through a dedicated property tax. This budget includes purchase of two command vehicles (one is carried forward from last fiscal year).  

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 two new full-time Street Maintenance Workers and the purchase of a small truck and F150 truck – both will be shared between all Public Work departments.  

The main project this year is the Fourth Street Reconstruction, which will include the replacement of the street, water, sewer, and storm sewer along Fourth Street east of Lincoln and cross streets (Vine, Apple, and Park). The expansion of the intersection at Hartman Lane and Central Park Drive is also scheduled in FY25. 

The Water Fund is budgeted at $17,455,795. This is a 7% increase from last year, primarily due to capital projects and maintenance. This budget includes water main replacement projects for North Cherry (carried forward from last year) and Fourth Street, and continuation of the water main replacement program. This budget also includes purchase of a single axle dump truck and two mowers (both shared with Sewer) and plans for an additional public works building with office space and equipment storage (cost to be shared with the Sewer Fund). 

The Sewer Fund decreased 26% from last year, mostly due to the completion of the Wastewater Treatment Plant project. The $15 million Wastewater Treatment Plant expansion that was first budgeted back in fiscal year 2020 was completed in FY2024. The FY2025 budget includes bank stabilization for Silver Creek, purchase of a single axle dump truck and two mowers (shared with the Water Fund), an F350 with service body, a gator utility vehicle, a UV cover, and plans for an additional Public Works Operations Building with office space and equipment storage (cost to be shared with the Water Fund). Infrastructure projects include Fourth Street, Northern Dancer, and Woodstream By-Pass, and continuation of the sewer lining program. 

Summary: 

Hotel/Motel Tax and Food/Beverage Tax revenues are back to pre-COVID levels, 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. If there are significant changes in revenue due to state’s elimination of the sales tax on grocery items, then the City Council will have to revisit the budget to balance expenses with reduced revenues. 

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.