Big spending has Poplar Bluff in bind

POPLAR BLUFF, Mo. -- As Poplar Bluff City Council members consider a drainage project and other unbudgeted expenses, the consequences of the city's spending in the past year are becoming apparent.

The drainage project would have to come from cash reserves, according to city manager Mark Massingham.

The money could be drawn against the capital improvement fund, which pays for citywide equipment and building repairs, or the general fund, the city's main account.

The capital improvement fund already is expected to spend the next three years in the red, likely depleting much, if not all, of its $1.7 million cash reserve.

The future of the general fund remains uncertain after taking an unexpected $1.5 million hit earlier this year when the city failed to find an acceptable loan to cover money spent on its second round of unbudgeted technology projects.

The city has begun its 2016 budget process, with capital allocations first on a long list of tasks.

This includes decisions that will have to be made about union contracts, employee raises and how much to continue spending on a newly installed phone and computer system the city cannot maintain in-house.

The future of city hall, once due to be replaced this year, has not been discussed in months.

No plans for many of these matters were discussed publicly as city officials approved -- at the behest of city manager Heath Kaplan, who was fired in May -- about $7 million in unbudgeted spending during a three-month period in 2014 on new technology and equipment upgrades. It included the phone and computer systems, plus equipment for the police department.

The capital fund will have a $1.7 million cash reserve by the end of this year, Massingham told the council during a meeting last week.

"That and some extra revenue needs to last us about three years," he said. "When you take all those expenses out, what I call fixed expenses (loan payments), we're going to have around $500,000 left each year to distribute among the departments or whatever projects we do."

Revenue for the capital improvement fund is generated by a one-half-cent sales tax.

This is projected to produce just under $2 million in 2016, barely keeping pace with nearly $1.9 million in loan payments, according to information released by the city.

Long-term debt payments are expected to overtake revenue in 2017, chipping away more at the cash reserve.

Loan expenses will reach almost $2.4 million by 2018, when projected revenue would barely top $2.1 million.

Massingham said he is using a conservative 1.5 percent annual increase to project future revenue.

Pertinent address:

Poplar Bluff, Mo.