Cape Girardeau cancels city employee pay raises

Cape Girardeau will attempt to keep its budget in balance by canceling cost-of-living increases for city workers, city finance director John Richbourg said.

Memos sent to all city employees last week told them not to expect the 2 percent raises, which would have become part of their base pay Jan. 1. Instead, Richbourg said Friday, all city employees will receive a $600 one-time payment Dec. 26.

And further cutbacks could be on the horizon, Richbourg said. Another way to save money could be to leave open jobs with the city unfilled.

"We are having preliminary conversations about that," he said. "That could work its way into the picture in the next couple of months."

The slowing national economy is making itself felt in the city's treasury, which depends heavily on sales taxes. As local consumers pulled back earlier this year, city expenses exceeded revenue by $538,000 in the fiscal year that ended June 30. The deficit was covered in part by the unrestricted surplus, which fell by $209,818 to $416,288, or about 1.8 percent off the annual general fund expenses.

In an analysis of city finances presented to the city council last week, Richbourg detailed some of the issues facing sales tax collections. Sales tax receipts fell about 0.6 percent during the year ending June 30, while inflation was 3.7 percent. Tax receipts from the city's top 100 retailers increased by 0.7 percent, while all other retailers paid in 2.5 percent less. Tax receipts from auto sales declined 6.8 percent.

In the first months of the current year, sales tax receipts are up slightly, but Richbourg is not confident that trend will continue. Personal spending cutbacks caused by the financial markets crisis, which wiped out trillions of dollars in investments as the stock market plummeted in September and October, haven't been felt in local sales tax returns yet, he said.

"I really don't know," Richbourg said. "September is the month the economy fell off a cliff. October was not any better, so we don't know."

There would be no money even for the $600 one-time payments except for one of the few bright spots in the city's budget picture, its self-funded health insurance program. Payouts for employee health care fell $400,000 during the year ending Aug. 31, and that is money the city will tap for the payments, he said.

The one-time payment will cost the city about $230,000, Richbourg said. That is more than the six-month cost of a 2 percent pay increase, but because it is a one-time payment the cost will not continue into future years.

Cape Girardeau firefighters are the only group of city employees with a union. The city does not engage in collective bargaining with the union and there is no union contract. Contacted Friday, Dean Lynn, president of Local 1084 of the International Association of Firefighters, said reaction to the news "is a little mixed."

He said he would know more after the union holds its regular monthly meeting this week.

The coming months will show how exposed to or sheltered from the national economic storm Cape Girardeau is. The pay move, Richbourg said, "gives us more flexibility in the future. And based on uncertain economic times, that is important."

rkeller@semissourian.com

388-3642

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