City Manager Greg Burris wrapped up five weeks of budget workshops Tuesday, May 30, proposing a $348 million balanced budget, with $83 million comprising the General Fund, the City’s primary operating fund. The first reading and public hearing for the budget took place tonight at 6:30 p.m. in Historic City Hall.
City Council requested two amendments to Burris’ proposed budget: the first amendment proposes funding to overhire three recruits during the Springfield Police Department’s annual Academy and unfreeze and reclassify two SPD support staff for a total cost of approximately $173,000. The request will be funded by reallocating funds budgeted as part of a three-year plan approved by Council in FY16 for the costs associated with holding two academy classes per year. The second Fiscal Year 2017 (FY17) academy class is due to graduate Sept. 1, 2017 and the next (and only) FY18 class is scheduled to begin Jan. 8, 2018.
The second amendment will seek to decrease proposed funding for the City’s planned MyCity customer service initiative by $20,000 in order to fund an intersection safety study.
The City’s fiscal year runs from July 1 to June 30 each year. Revenue projections are made several months in advance, with the adopted budget due by June 30. The City Charter outlines the process for the budget’s creation, which requires the City Manager to present a balanced budget to City Council for consideration at least 60 days prior to each budget year.
City operations are classified into fund groups for budget purpose. The General Fund covers most Police and Fire operations, Public Works, Planning and Development, Building Development Services and all administrative support functions. It relies on sales and use taxes for the majority of its revenue.
The City’s budget for the remaining governmental funds are specific to designated revenue sources and the restricted activities and services that are provided by those funds. The business-type funds are those funds that are fully supported by user fees. These “enterprise funds” are the airport, sewer, landfill and golf fund which generates fees that fully cover the costs of operations, including all capital acquisitions.
These enterprise funds operate without tax revenue or support from other City funds. Representatives from the Springfield-Branson National Airport, Springfield Art Museum, Environmental Services, Springfield-Greene County Park Board, Springfield-Greene County Health Department and the Department of Workforce Development gave brief overviews of their individual budgets in today’s workshop.
City Finance Director David Holtmann projects a disappointing end to the City’s current fiscal year 2017 (FY17), ending June 30. Although two months remain, Holtmann doesn’t expect sales tax to hit budgeted projections – a shortfall that could create challenges over the coming months for City departments. City Council has already committed to covering the shortfall with FY16 carryover funds.
“The volatility of our main revenue source (sales tax) for the General Fund and the transformative changes occurring in retail are making life difficult for municipalities across the country – not just in Springfield,” said Burris. “E-commerce is booming while retail brick-and-mortar stores are struggling, and even closing. Until there is an Internet sales tax, there will not be a level playing field and I suspect we will see many more closures of brick-and-mortar stores until the field is leveled.”
Defunct shopping centers represent lost tax dollars for already cash-strapped municipalities. Three major retailers have closed stores in Springfield within the past few months: Staples, MC Sports and Kmart. About 30% of citizens surveyed recently reported making retail purchases online. According to a story published in The Atlantic on April 30, thousands of store closings nationwide are projected through 2017, which is likely to surpass the Great Recession year of 2008.
Increases in other revenues, however, that are anticipated to exceed their FY17 budget, such as payments in lieu of taxes (PILOTs) from City Utilities and increases in revenue generated from licenses, fines and fees, are helping to offset the disappointing sales tax figures.
Fiscal year 2018 (18) total revenues are budgeted to increase only 0.9% over budgeted FY17, with sales tax projected 1.3% lower than sales tax budgeted for FY17.
As always, the budget requests received by the City Manager from City departments far exceed available funding. “All of the requests are for needed items and would improve the service we are able to provide our citizens,” Burris said. “We are committed to living within our means and our departments have done a remarkable job of that, based on citizen satisfaction scores and voter confidence in sales tax renewals. It’s clear, though, that a new funding model – and one that does not raise taxes – is needed.
At the first FY2017-2018 budget workshop May 2, Mayor Ken McClure brought an idea forward to consider the use of Level Property Tax as a potential tool to help address capital improvement needs that are currently unfunded. Instituted in the 1980s, the program consists of taxpayers currently paying a “level” property tax of 27 cents on each $100 of assessed property value. The revenues have been used to fund large-scale capital projects, such as: Fire station construction, apparatus, and associated equipment; an emergency storm warning system; Jordan Valley Park land acquisitions; some stormwater improvements and public facilities maintenance.
Some past projects funded by the Level Property Tax are “rolling off” (completing bond payments), so some funds will available in FY18 and beyond to address urgent capital improvement needs. Voter approval use of this funding source for public capital improvements would not result in any additional cost to the taxpayers.
City Council directed staff to do additional research about the potential use of Level Property Tax for further discussion.
Where to Find Budget DetailsThroughout the budget workshop process (May 1 - June 30), the public has access to both the proposed budget and the later adopted budget online at Springfieldmo.gov/Budget and at the City’s data portal: Springfieldmo.gov/OpenData.
On both of these web pages, there are links to full line item detail budget reports in addition to helpful summaries.
Printed copies of the proposed budget are available at a cost of $45.44 (the cost of printing).
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