City council hears about employee pay raises, potential rate increases at retreat
Thursday, April 22, 2010
Cape Girardeau City Council members like a budget proposal that includes a 1 percent pay increase for city workers, but need convincing that the city should increase water and sewer rates.
The council on Wednesday got a first look at the spending plan for the upcoming year during its annual retreat at the Osage Community Centre. In the outline reviewed Wednesday, city finance director John Richbourg projects that tax revenue will continue to grow more slowly than inflation and spending growth of 3 percent annually over the next five years will put pressure on reserve funds.
But after two years with only a handful of city employees receiving a pay raise, a budget that shows any kind of increase is welcome, Mayor Harry Rediger said. "We feel good that we are able to do anything at all," he said.
Cape Girardeau relies heavily on sales taxes to fund operations. Tax revenue is growing about 1 percent this year and is expected to continue to grow at that rate in the budget year that begins July 1. At this time last year, the city was worried it would face declining revenue and a depleted unrestricted reserve. But the growth, while anemic, has helped stabilize city finances and, along with other steps, halted the decline in available reserves.
A 1 percent raise for all city workers will cost the city $144,430, Richbourg told the council. The city payroll is budgeted at $12.8 million this year with an additional $4.7 million for health, retirement and other benefits.
A raise is needed to reward the employees who have remained loyal to the city, Ward 3 Councilwoman Debra Tracy said.
"They have worked hard during a challenging time and they have really risen to that challenge," she said. "I am grateful we haven't had to eliminate a lot of jobs."
The warning that even a modestly increasing budget would outstrip the ability of the city's tax base to support it worried Ward 1 Councilman John Voss. "We have got to have a sustainable model for anything we provide," Voss said. "One percent is a start. I hope it is not the end."
The budget proposal outlined Wednesday also calls for a 5 percent increase in water and sewer rates. The increase, if approved, would raise $300,000 for the water utility and $150,000 for the sewer fund. The budget does not include an increase in the charge for garbage collection, which should realize substantial savings in personnel and equipment costs with a switch to automated collection.
While actual cost of the increase is small for each customer -- the average residential customer would pay an extra $1.71 per month -- the city could score points with the public by keeping rates unchanged, several council members said.
"It is not as much a dollar thing as a perception thing," Rediger said. "It is pretty easy to sell $1.71"
The recession has hurt a lot of people and the city needs to show it is working to control costs, not pass them on to residents, Ward 5 Councilman Mark Lanzotti said. The city switched to automated trash collection without increasing rates, but the public might think the water and sewer rate increases are related to that change, he said.
The city charges each sewer customer $4.29 per month for their connection and $1.29 per 100 cubic feet of water used. Water costs include a monthy line charge and a cost of $2.117 per 100 cubic feet for the first 6,000 cubic feet of water used.
Richbourg said he included the rate increases to make up for lower-than-expected revenue at the sewer plant following increased dumping rates for companies serving septic tanks. The water rate increase will make up for lower water usage last year, Richbourg said.
"I have no doubt there are reasons for the increase," Ward 5 Councilman Mark Lanzotti said. "But we should show we can hold the line."
Voss agreed, asking Richbourg what the effect on operations would be if no increase is approved.
City manager Scott Meyer said the council will get a detailed explanation of the proposed increase but said he thinks the increase is reasonable. If Cape Girardeau's sewer rates are compared with those of other area cities, "they are almost artificially low," Meyer said.
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