Cape City Council debates budget cuts

Cape Girardeau City Council representative Jay Purcell has been hearing the same story for the last three years, and he heard it again Wednesday evening.

The economy will bounce back, and when it does, the city will be OK, the city finance director has said.

But during the last three years, the economy has not bounced back and the city's finances have been less than OK, forcing officials to dip into reserves when sales tax revenue failed to compensate annual costs. The time to start cutting the budget -- and perhaps some city services -- is now, says Purcell.

Mayor Jay Knudtson said this year is not the time to panic. Should the sales tax rate be flat once again, dipping into reserves to pay for items like fire hoses, vehicles and the like is acting responsibly. Much like an average person would dip into reserves to pay for a broken washer or dryer, he said, the city would be paying for necessary equipment to carry out daily operations.

And therein lies the dilemma facing the city council.

The council deliberated philosophical differences for about two hours Wednesday night, discussing the possibility of passing a budget with a flat sales tax rate.

The proposed budget the council will be deciding on in upcoming meetings projects a 3-percent growth in tax revenue. It already has cut out numerous equipment requests.

But the city saw just a 0.07 percent increase last year, which was far from the rate of inflation, causing the city to dip into reserves for $300,000. So far this year, the city has seen a .3 percent growth rate, but finance director John Richbourg said it's still too early in the year to forecast a trend.

Should the city run into the same flat-tax situation again under the current proposed budget, it would leave the reserves with about $175,000 at the end of the next fiscal year.

The city budget team, made up of department heads, provided the council with a recommendation on how a balanced budget could be achieved with $246,000 less in revenue. The cuts included:

The elimination of a 1-percent across-the-board pay raise to city employees.

The delay in a grant-funded rehab of a runway at the airport. This would save the city $59,000 in a local match, but would require the airport to budget an additional $15,000 for runway maintenance.

Fund economic development costs of $63,750 included in the proposed general fund budget with convention and visitors bureau fund revenue.

Make sewer and golf funds repay current amounts due the general fund over a 15-year period with a 5-percent interest rate. This would result in additional revenue to the general fund of $37,300 annually for the next 15 years. Currently, the funds only pay interest on their outstanding debt. Repayment of this debt would require a 0.75 percent sewer rate increase and a 5 percent golf fees increase.

Leaning toward approval

It appears, after much discussion, that the council is leaning toward approving the proposed budget as it stands.

Knudtson and councilwoman Evelyn Boardman were most adamant on passing the budget as it stands.

Purcell was the most firm about cutting at least some items to absorb impact now rather than making drastic cuts all at once if revenue doesn't improve. Councilman Charlie Herbst was leaning in that direction as well, but did not commit one way or the other.

Councilman Hugh White said he supports the current budget but would like the city to check on sales tax receipts every quarter and make necessary cuts as the fiscal year progresses.

Councilman Matt Hopkins is undecided on the issue. He, like Purcell and White, has heard the optimistic stories of economic growth in the last couple years. At first, he said he would pass the proposed the budget but later said he wants to think some more about making some cuts.

"There's been a lot of thought given to this budget and it's pretty lean," Hopkins said. "There's not any fat to cut. If we cut, we'll be cutting the meat."

Councilwoman Marcia Ritter, who requested that city management come up with options for a no-growth budget, did not attend the meeting due to a family medical emergency.

On the list of no-growth budget recommendations made by the budget team was a lengthy list of other options that were discussed.

One of those items that generated a lot of discussion was making residents pay $100 for first-response service by the fire department. A $100 fee could generate as much as $170,000 in additional revenue.

bmiller@semissourian.com

335-6611, extension 127