CITY COUNCIL VIEWS SLIPPING TAX REVENUES

CAPE GIRARDEAU -- City officials said Monday that preliminary sales tax revenue figures indicate there may be an $800,000 shortfall in projected operating funds over the next two years.

Assistant City Manager Al Stoverink said preliminary indications are that the $4.7 million in sales tax receipts in 1989-90 likely won't increase this year or next.

The 1989-90 receipts were below the $5 million budgeted last year for operating funds.

If the receipts remain at the $4.7 million level, it would be about $530,000 below normal growth in the 1991-92 budget.

"Who knows for sure, but based on what we see happening, we anticipate that we're in, hopefully, a short-term economic downturn," Stoverink said.

He reviewed the budget concerns at a special study session of the City Council Monday. Stoverink said the city's sales tax receipts showed no growth during the first nine months this year.

Despite the stagnation of the sales tax, Stoverink said the city still is in a "solid financial position," and will be able to compensate for the shortfalls in this year's budget.

But, he said, spending adjustments will have to be made next year to keep city books in the black.

The city recommended four steps be taken to balance the expected sales tax receipts next year. They include plans to:

Reduce requested additional full-time employees from nine to two, and reduce current employees by one through attrition.

Limit pay raises to those necessary to complete implementation of a pay plan initiated this year. No across-the-board pay raises or benefit increases would be proposed for next year.

Limit capital equipment purchases to critically essential replacements. This will mean continuing deferral of major equipment replacements such as a new fire pumper at a cost of $175,000 and a central communications console for the police and fire departments at $90,000.

Increase to $500,000 the transfer to the general funds from the Motor Fuel Tax. During the past two fiscal years, the city has not transferred any Motor Fuel Tax funds to the General Fund. Prior to that, $560,000 was transferred each year.

Stoverink stressed that the tax projections were only preliminary and that if receipts rebound next year, the stop-gap measures would be short-lived.

"If we had to continue this plan to the second year, it would cause some significant concerns for us," he said. "But if the downturn is short-lived, and we rebound next year, we can get through this year in pretty good shape."

Stoverink said the conservative budget policies of the past few years should allow the city to "bridge" any short-term economic downturn.

City Manager J. Ronald Fischer said: "We are in a situation where we can accommodate a downturn, and we do have one coming."

But City Council members said they didn't want to freeze city employee salaries, even for a single year.

"Since these are preliminary figures, I'll make a preliminary statement that I would oppose any proposal that would not give pay increases," said Councilman Hugh White. "If there's any possible way to balance this budget and still give some pay increases, we need to do it."

But Fischer said the projections were conservative at best. He said the staff didn't include expected increases in employee health care and workman's compensation benefits in the projections. Last year, the city's health insurance costs increased about 30 percent, he added.

"Ladies and gentlemen, this is not a fat budget right where it is," Fischer said.

Stoverink said that without the pay freeze, the city would have to "take an axe to our capital equipment replacement program." He said there's little the city can do to cinch its budget "belt" tighter.

The City Council will consider the matter further when it reviews the proposed fiscal year 1991-92 budget prior to its adoption in July.