FOR IMMEDIATE RELEASE
City Manager Jason Gage began a series of City Council workshops Tuesday, April 23 in preparation for the formal presentation of the FY 2019-20 budget recommendations. The City’s fiscal year runs from July 1 – June 30 each year. The first workshop was held during City Council’s regular lunch meeting and provided a high-level overview of the City’s annual budget development process. Gage provided a general overview and indicated the priorities for the General Fund proposed budget.
“My first priority in developing the FY20 budget relates to employee recruitment and retention. Employee recruitment and retention is the foundation for implementing City Council’s priorities of public safety, economic vitality, and fiscal sustainability,” said Gage. “We must increase our employee pay to ensure we remain competitive in employee salaries. To the most financially prudent extent possible, employee compensation has been addressed to move employee pay toward the middle third of the City’s benchmark cities and organizations. Many of our positions are now within the target middle third, but many still remain in the lower third and need continued attention. My proposed employee compensation funding pool is intended to help address this challenge.”
The largest individual segment of the City’s operations is supported by the General Fund, (approximately $86.1 million), which covers most police and fire operations, public works, planning and development, building development services, and all administrative support services. These activities are funded by four major General Fund revenue sources: sales and use tax, payments in lieu of taxes (PILOTs), other taxes, and licenses and fines. The General Fund is the primary focus of the City’s annual budget process because it funds many of the high-profile citizen services (e.g., those listed above) and is the revenue source that provides the most flexibility in use by City Council.
As in prior years, the City’s General Fund operational and capital needs continue to exceed available funding. A total of $14 million of budget requests related to spending increases were submitted by the City departments. In all, Gage is recommending increased funding for approximately $3.8 million of ongoing costs and $1.1 million of one-time requests in the FY2020 proposed budget.
For FY2019, sales tax revenue was budgeted to grow 1.5%. Sales tax is exceeding last year’s actuals to date (April 2019) by 3.3% and is projected to end 1.8% over FY2019 budget. To budget for FY20, the base was then increased 1.5% for the upcoming fiscal year. Use tax revenue, a smaller component of sales tax on goods sold to Springfield residents by out-of-state vendors, has seen growth over last year and is expected to see growth again in FY2020.
“Economists tell us that we are currently experiencing the second longest period of economic expansion in the history of the United States,” Gage said. “Though we hope this expansion period continues for many more years, we believe it is prudent to budget our sales tax on the expectation of an economic slowdown in the near future. It is difficult to forecast retail sales for the upcoming 16 months, so we will closely monitor actual sales tax and revenue during the upcoming fiscal year.”
The City’s second largest general revenue source is Payments in Lieu of Taxes (PILOT). PILOT revenue is generated as a percentage of the gross receipts collection from City Utilities, the City’s municipally-owned utility. Currently, the City’s PILOT revenue is on track to exceed last year by 3%. FY2018 actuals of $15.3 million exceeded the FY2019 budget of $15 million due to higher than expected revenue on electricity; the largest segment of this revenue source. Revenue from PILOT’s for FY2019 is projected to be $15.8 million. PILOT’s are a challenging revenue source to project due to its dependency on the weather.
While the Level Property Tax now provides funding for much needed lifecycle capital replacement and additional public safety staffing, it does not alleviate much General Fund budget pressure, Gage explained.
“Although the renewal of the Level Property Tax (LPT) and its increased flexibility allows us to address some pressing needs, we continue, however, to have unfunded ongoing capital needs.”
For example, $12.1 million dollars of reasonable capital requests were submitted, with the ability to only fund $3.5 million in both carryover funds and the FY20 proposed budget.
Expenditures of Level Property Tax funds are included in the FY20 budget proposal, including promised projects that were included in the Council bill authorizing the renewal ballot in August 2017.
About the City’s Budget Process
The annual budget is a plan – a financial proposal that directs the provision of public services and facilities. The services provided by a public organization are based on the available revenues (funds) from all sources as approved in its annual budget.
The City’s budget process is led by the City Manager, who is required by the City Charter, to present a proposed balanced budget to City Council by May 1. The series of budget workshops allow City Council time to review and discuss the City Manager’s proposed budget and to approve the budget before the new fiscal year begins on July 1 each year.
The following general principles have been followed in the financial management of the City and in the development of the annual budget. These policies have been developed to guide the City in delivering a consistent level of service, while maintaining a stable financial position and equitable tax structure.
- Financial Planning Policies (including operating with a balanced budget)
- Revenue Policies (such as fees for services paid for by those receiving the services to recover the cost of providing the services)
- Expenditure Policies (such as providing the best service possible given revenue constraints and maintaining adequate cash reserves).
The FY20 proposed budget attempts to address funding needs within all areas of the organization. However, consistently over the past eight years, law enforcement and public safety have been the clear funding priorities
Throughout 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 Springfieldmo.gov/OpenData (the City’s data portal). On both of these web pages, there are links to full line-item detail reports in addition to helpful summaries. Printed copies of the proposed budget are available at the cost of printing.
The City Council lunch workshops are open to the public and broadcast live on CityView’s channels on Mediacom and U-Verse. They are live streamed from the CityofSGF Facebook site and on springfieldmo.gov.
For more information, contact Cora Scott, Director of Public Information & Civic Engagement, at 417-380-3352 or [email protected]dmo.gov.