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U. City faces deficit, flood buyouts in jeopardy
(by Jenny Fisher - May 18, 2009)
With a $1.3 million deficit in the city’s draft budget for fiscal year 2010, University City council members will make some tough calls over the next month. Reduced sales tax revenues and ballooning costs of health insurance for city employees mean the city may have to cut services and the council has already approved putting a one-quarter cent sales tax increase on the ballot in August.
It’s not just the city’s regular services and capital improvements that are endangered by the deficit — the planned buyout of 26 homes that were severely flooded by the River Des Peres last fall is now in jeopardy. After the September flood in which two people lost their lives, University City began planning to buy up homes with the help of a State Emergency Management Agency (SEMA) grant of $3 million. The city’s contribution would be $1 million. That money is not included in the draft budget.
“I think we were very aggressive at the beginning, with the Wilson residents, wanting to make this happen,” City Manager Julie Feier said at a budget presentation to citizens April 27. “It would be impossible to do the Wilson property buyouts and fund the deficit budget out of the city’s reserves.”
At least 20 homeowners stood up in support of the buyout at a May 4 council meeting. One man held a sign reading, “Please Buy Our House.”
“This is not a one-time flood,” said Wilson Avenue resident Kelly O’Daniels. “Wilson has flooded dozens of times in the last three years. First and foremost, I would ask that the city council does not delay the buyout.” O’Daniels added that she had heard from council members that there was not enough support for the buyout from families on Wilson.
“I am here tonight with the families on Wilson and I am here to tell you that is not true,” she said. “Twenty-five of 26 homeowners have signed the SEMA waiver. We are ready to move.”
“With regards to the flooding on the river side of Wilson, to me it’s not a question of if, but when it’s going to flood there,” said Anthony Perkins, another Wilson resident. “We all say a prayer every time it rains, and we live in fear of the river that lives behind us, so please do the right thing.”
Over the course of the next month, the city will hold at least one public budget study session on May 14 and an official public hearing on June 1. An official budget must be adopted by June 15.
If the city were to go ahead with a $1.3 million deficit, that money would come out of its reserves. University City has been building up the reserves over the past few years, said deputy city manager and finance director Janet Watson. Spending money out of reserves is feasible, but not as a long-term strategy, she said. And the $1 million contribution University City would have to make to the buyout is additional money that the city does not have.
“We’ve already done a lot of things that other cities would do when they’re in an economic downturn,” Watson said. In the last two years, University City has cut 38 positions, making up 12 percent of its total workforce.
Feier said the sour economy has only worsened the city’s pre-existing financial problems. Sales taxes typically make up one-third of the city’s revenue, and they have decreased throughout Missouri. From fiscal year 2008 through fiscal year 2009, University City’s sales tax revenue is estimated to have decreased by more than half a million dollars, and city officials expect it to decrease slightly more by the end of fiscal year 2010. Revenue from utility taxes, licenses and inspection fees has also gone down due to the economy.
Though council members have already taken a step toward reducing the deficit by passing Proposition S, the resolution to put a quarter-cent sales tax on the ballot, other budget items are on the table. The city has hired a consultant to look at consolidating its fire department and dispatch with Olivette, Clayton, Richmond Heights and Maplewood. Without consolidation, University City estimates it would spend more than $4 million on its fire department in fiscal year 2010, plus another $575,000 for a new pumper.
The largest single expenditure in the city’s budget is salaries, estimated at nearly $13 million in fiscal year 2009. Many people who attended the budget presentation April 27 and the city council meeting May 4 suggested cutting positions from the city’s staff, particularly the assistant city manager, the assistant fire chief and the assistant chief of police. Some suggested furloughs and unpaid vacation.
“To continue with the very high level of service we’re delivering, we need the staff we have,” Feier said. “The trick with furloughs is, that works for one year, and we need to work year after year and make permanent changes.”
The second single largest cost on the budget is medical insurance, at more than $1 million in fiscal year 2009. And costs are only expected to go up. “We are looking at that, because it is a very, very large item,” Watson said.
The city is looking into forming an insurance pool with 18 nearby municipalities to share the cost of insurance coverage. Other options include increasing office co-pays, adding a deductible and increasing the amount employees pay monthly with the city’s current insurance provider, Group Health Plan, Inc. Under its current plan, the city picks up 75 percent of an individual’s policy cost and 85 percent of a family’s.
Council members seemed overwhelmed by the deficit and the cuts that would be required. “We’re sitting back here getting a fire hose stream of data in the last week,” said council member Wagner. The main thing they’ve heard is “don’t spend more than you earn.”
“We were presented with a $1.3 million budget deficit. Right now we’re doing everything we can to get that rectified,” said council member Byron Price. “People are trying to balance not bankrupting the whole city and flooding people on Wilson.”
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