According to the budget statement prepared by City Administrator Dennis Pyle, the spending plan will require dipping into reserves, because of the Highway 60 widening project. As much as $159,300 of the expenses from the project will be paid in the coming fiscal year.
The city had to pay for the entire project up front and will receive reimbursement from the Missouri Department of Transportation (MoDOT) over the next few years from two different sources. Until that money comes through, Pyle told The Times the first tax increment financing (TIF) district is leveraged to its maximum level and will not be able to take on any new projects before the original TIF debt is retired by a $1 million MoDOT payment in 2010.
For the coming fiscal year, the city is expecting to spend $31,919,801 and receive revenues of $31,713,886. This spending plan is about $200,000 smaller than the 2007 budget and $10 million under the 2008-09 budget, which included the bulk of the Highway 60 widening project and the Eisenhower railroad bridge.
"At the time the fiscal year 2010 budget is being prepared, the U.S. economy is experiencing a severe recession," Pyle wrote in the budget summary statement. "Unemployment in Missouri is currently 8 percent, which is significantly higher than one year ago. The national gross domestic product (GDP) fell by an annual rate of 6.2 percent in the fourth quarter of 2009, and the city's sales tax revenues have declined significantly during the same period. Due to these declining revenues, the city does not anticipate funding any capital improvement projects in this budget that are supported by general revenue funds."
Income reduction expected
A 3 percent decline in sales tax revenues is expected. That will reduce general sales tax income by $97,710, for a total of $1,777,995. The half-cent sales tax for capital improvements is expected to earn $889,000, while the quarter-cent tax paying off the Justice Center is figured to bring in $427,825. The city will need to spend $487,075 on its TIF debt in the coming year.
Several other pressure points impacted the budget plan. Pyle noted that the surcharge the city has had on telephone land lines in Barry County to pay for "911" services will have to be discontinued this year. That will reduce income by $60,000, forcing that much more to be drawn from general revenue to pay for the city's system. The completion of the county-wide "911" system in Barry County, funded by a sales tax, forces the city's pre-established funding system to be dropped by law.
Due to the economic slump, construction in the city is expected to drop significantly. For the fiscal year ending on March 31, 2008, the city got $31,313 before the big decline in commercial and industrial building seen in the current year. Pyle was counting on only $5,000 in building permit revenue for the current fiscal year. That may rise to $10,000 for the coming year, but he cautioned that could be overly optimistic.
There is a possibility a settlement may be reached with Alltel and T-Mobile for unpaid cell phone franchise taxes, like the settlement reached with four other companies last year. If that happens, Pyle figured revenues to the city could rise by $2,000 to $3,000 a month. As with previous settlements, the cost of outside [legal] counsel has been off-set by a one-time payment by the phone company at settlement to the cities for legal fees," Pyle stated.
Under these pressures, the city has decided to follow the lead of Barry County and offer no cost of living raises in the coming year. This is the first time such an action has been taken since the Fulp administration.
Capital improvements to freeze
For the past 15 years, the city has spent around $2 million a year on assorted capital improvement projects. According to Pyle, ballot language for the half-cent sales tax for capital improvements allows the city to spend that money on repairs and maintenance. All the money will go to that purpose in the coming year.
A number of capital projects were nonetheless requested and considered. The Fire Department requested a new pumper truck for $250,000. "Not this year," was Pyle's response to that proposal.
The Sanitation Department wanted a new rear-loading garbage truck that cost $140,000. The Street Department wanted two dump trucks costing $112,000 each. The Police Department wanted two new patrol cars at $30,000 each. The South Park superintendent requested a new tractor for $35,000, and the animal control officer requested a new truck for $16,000. All these requests were shelved for the year.
Another proposal that got scrutinized was construction of a new 10-bay T-hangar for the airport. Pyle first figured the project would cost $300,000, but by year's end the cost was up to $450,000. On a lease purchase at 4.75 percent interest over 10 years, the annual payment would run $39,600. All the T-hangar revenue at the airport, including 10 more units, would only bring in $20,000 a year. At that cost, Pyle said the undertaking was not within reach and would not pay for itself.
One major project that will move forward is the surface water treatment plant that Utilities Superintendent Pete Rauch has proposed for the former Rutherford farm on the northwest corner of town. Such a plant, Rauch has explained, would free the city from total dependence on deep wells for water. It would also enable the city to use production from the major well at North Park, which has a history of periodic muddiness, and the new well on the Jack Henry property, which has never been used because of muddiness and bacteria issues.
Such a treatment system was viewed last year as the city's top priority by the city council's advisory board. The multi-million-dollar undertaking will take at least a year alone to build, to say nothing of additional pipe installation to route water in that quantity to a different corner of town. The budget has $250,000 in it for engineering to get the process started.
To pay off its current debts, the city will spend $1,701,190 in principle and another $1,138,683 in interest on bonds and lease purchase obligations in the coming year. The total debt load the city is presently carrying adds up to $26,495,515.
TOMORROW: Water and sewer rate increases planned