University City Holds First Budget Study Session for FY13

University City started the budget process for fiscal year 2013 on Tuesday evening by holding a budget study session.

City Manager Lehman Walker started the study session by giving a presentation of the current year budget, projections for next year and challenges for the future. The FY13 budget starts in July 2102 and goes through Jun 2013.

Some of the challenges University City faces, according to Walker, include:

• Revenues not keeping pace with expenditures
• Impact of declining population on per capita revenues. The recent census showed that the population has declined by more than 2,000 people. Walker said the loss of population means an annual loss of revenue to University City of about $400,000.
• Potential loss of sales tax due to proposed legislation
• Additional capital needs

HISTORY OF GENERAL FUND REVENUES

Walker said the city's revenue stream has essentially been flat for the last couple of years.

"There has been virtually no growth in our revenues for approximately eight to nine years," he said.

Walker said that University City's principle source of revenue, 80 percent, comes from sales tax.

"Our sales tax revenue for FY12 and FY13 projections are basically the same as what they were for FY4 and FY5," said Walker. "Eight, nine years ago, our revenues were similar to what they are now, but our expenditures have increased significantly. So, essentially our revenues are not keeping pace with our expenditures."

NEXT YEAR BUDGET PROJECTIONS

General Fund FY13 (July 2012-June 2013) (No cost of living allowance)
Revenue                 $26,148,505
Expenditures           $26,381,526
Projected Deficit      $233,021

The above budget projection does NOT include a cost of living increase for city staff for next year. However, it does include the following projected annual expenditure increases:

• Salaries: 1 percent for step increases
• Medical Insurance: 11 percent
• Other Benefits: 3 percent
• Contractual: 2 percent
• Supplies: 2 percent

Walker said the city's medical insurance costs for this year have been coming in a lower than had been projected. He also said that city employees have not been given a cost of living increase in three years.

NEXT YEAR BUDGET ESTIMATES

General Fund FY13 (July 2012-June 2013) (Includes a 2 percent cost of living allowance for FY13)

Revenue             $26,148,505
Expenditures       $26,632,765
Projected Deficit  $484,260

The above projections include a 2 percent cost of living increase for city employees. Adding the 2 percent cost of living increase would raise the projected deficit to $484,260. Without the cost of living allowance, the projected deficit would stand at $233,021.

CAPITAL IMPROVEMENTS

According to the city engineer:

Sidewalks and Curbs

• 12-year plan to make sidewalks and curbs ADA compliant=$337,500 for each of 12 years, for a total of $4,050,000
• Annual routine maintenance=$772,500 each year

Street Pavement

• 12-year plan to address current backlog of street repairs=$1,350,000 for each of 12 years, for a total of $16,200,000
• Annual routine maintenance on street pavement=$370,000 each year

"At some point in time, we're going to have to consider a bond issue likely in order to finance capital improvements if that is the will of the council and the will of the people," Walker said.

RECOMMENDATIONS

At the end of his presentation, Walker put forth some recommendations for the council going forward. He suggested the council direct himself, the city manager, to:

1. Establish a priority list of city services to fund
2. Identify areas for revenue increases
3. Determine methods of funding long-term capital needs (i.e. use of reserves, bond issue, tax increases)

"There are some options there that staff will explore. We're not asking for any decisions this evening, but I wanted to make sure that council is aware of the information," Walker said. He noted that the advantage of starting the budget process early is that, "we get a good idea of where we are in respect to the financial situation of the city."

COUNCIL REACTION

"Can you talk to me about the street issue?" Ward 2 Councilmember Lynn Ricci asked Walker. "I see we've been spending millions every year on the street department, street maintenance and it appears you're telling us that we need to spend another two million. How does this happen?" Ricci asked.

Walker said that based on staff analysis, streets have been underfunded in respect to maintenance for several years. He said as a result, the condition of University City streets, are not where they should be.

"We should have been, over the years, allocating more to our capital improvements," Walker added.

Mayor Welsch said the majority of phone calls she receives from residents involve trash, trees, streets, curbs and sidewalks.

The mayor also asked Walker if the figures he presented Tuesday take into the consolidation of the Public Works and Parks Departments.

"No, these numbers do not include some of the savings that will be achieved as a result of that," Walker said. He predicts the move to combine departments will net the city $100,000 immediately, as a result of some of the changes being made. He predicts there will be further savings over time.

He said the city would save the money by not filling vacancies, reallocating some staff and changing some job descriptions.

The first public meeting on next year’s budget will be held Oct. 27 at 6:00PM at . Citizen attendance as well as citizen input is greatly encouraged.