Cape Girardeau's plan: Raise utility rates, freeze employee salaries

Larger water, sewer and trash bills could be the biggest changes Cape Girardeau residents would see as city officials look for ways to balance the budget for the coming year.

When the Cape Girardeau City Council meets at 6:30 p.m. Monday at city hall for a budget work session, members will hear that the city can survive the economic slowdown cutting into tax receipts without layoffs, interim city manager Ken Eftink said. But for the second year in a row, most city workers will not receive a raise, he added.

That's because there's no money available to increase salaries. The city must close a gap of $600,000 to $800,000 in the general fund for the upcoming year, a task made more difficult because the council has dipped into the city operating reserve in each of the past five years.

The reserve, which is separate from an emergency fund required by the city charter, has fallen from $1.4 million on June 30, 2004, to a projected balance of less than $300,000 on June 30 this year. The budget Eftink will present Monday attempts to reverse that trend, a difficult task during a recession but necessary, he said, to stabilize city finances.

The only exception to the no-raises policy will be in the police department. Lower-ranking officers last fall were promised they would receive a 1 percent step increase and a 1 percent anniversary raise, Eftink said.

The lack of money for raises is disappointing, said Mayor Jay Knudtson, who said at the council retreat March 27 that he wanted, if possible, to provide pay increases.

"It appears more and more apparent that will be an impossible task," Knudtson said.

The top task for city department chiefs as the budget was developed was to find cuts without job losses that would curtail services, Eftink said. By cutting travel, eliminating a citywide newsletter and leaving open jobs unfilled, the city can save $419,000, he said.

"All the department heads understand the gravity of the situation and worked hard and thought outside the box" to realize the savings, Eftink said.

Balancing the budget

Cape Girardeau uses several funds to make up its annual budget of about $49 million. The largest is the general fund, which was budgeted to provide $20.8 million during the year that will end June 30. But the city's general revenue sales tax, the largest single contributor to the general fund, is $300,000 to $325,000 short of projections for the year.

The spending proposal to be presented Monday anticipates no growth in the $8.6 million sales tax revenue stream in the coming year. Overall, revenue for operations outside the water, sewer and trash funds are expected to be $660,000 short of this year's budgeted amounts. That shortfall, coupled with unavoidable cost increases, is where Eftink and city leaders began when they started looking for savings and new sources of money.

The city's water, sewer and trash services are operated as enterprise funds. They do not contribute directly to the general fund. But by adding the city's 5 percent gross receipts tax to sewer bills and doubling the 2.5 percent tax imposed on water bills, the general fund would realize about $295,000, Eftink said.

Additional money will come from the enterprise funds by allocating part of the city's overall administrative costs to those funds. That will provide another $138,000, he said. "It is all just trying to run the city like a business," Eftink said.

Raising fees

To recover the money shifted to administration, Eftink will propose increasing water, sewer and trash fees by 5 percent. The increase will mean average residential customers will pay $2.44 more per month and the commercial customer will pay $6.87 more each month.

"Our goal was to adjust the fee to fit the actual cost of the service," Eftink said. "The bottom line is we were helping support our utility funds with general sales tax revenue."

The city also hopes to capture $200,000 from waste haulers who dump effluent pumped from septic tanks at the city sewer plant. To do that, the city increased the dumping fee from $10 a load to 7 cents per gallon.

When the city first started allowing haulers to dump at the sewer plant in the early 1990s, the typical tank truck held 1,000 gallons, said Dennis Hale, manager of the sewer plant. Today's tankers are much larger, typically 1,500 to 2,000 gallons but one hauler uses a truck that holds 6,700 gallons and the fee has not changed, Hale said.

"They have figured out that they can bring in a much larger truck for the same price," he said.

Ways to save

The uncertainty in the upcoming budget year is whether sales tax receipts will continue to fall, Knudtson said. The savings realized in this round of belt-tightening will mean little if revenue is significantly lower than projections.

The silver lining of not finding cuts that could fund pay raises is that the city believes it is operating on a tight level, Knudtson said. As departmental budgets were scoured for savings, the city learned "that we are running very efficiently and there are not a lot of inefficiencies that are glaring. From a taxpayer standpoint, that is reassuring."

But the downside is that the savings realized this year can't be repeated in future years, he said. If the economy lags, city leaders anticipate layoffs and other painful cuts could be the starting point for budget planning in the spring of 2010, Knudtson said.

"If the economy does not change, next year's budget discussions will be entirely different," he said. "There will be layoffs, hiring freezes and reduction in services. There is no way we are going to be able to retain employees and maintain services without significant sales tax growth because we are too reliant on it."

rkeller@semissourian.com

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Pertinent address:

401 Independence Street, Cape Girardeau, Mo.