CITY: `NO DEFICIT SPENDING'; COUNCIL REVIEWS COMING YEAR'S BUDGET, SAGGING REVENUES

The Cape Girardeau city staff Tuesday countered claims that the city would deficit spend under next year's $27 million operating budget proposal.

Assistant City Manager Al Stoverink told the City Council at a special meeting Tuesday that sagging city sales-tax receipts won't require deficit spending but will require that funds from the city's motor-fuels tax be transferred from new street projects to general street maintenance.

The City Charter adopted in 1981 prohibits budgeting that allows for deficit spending.

"We are not deficit spending," Stoverink said, "particularly if you look at the general fund, where we've got a net income. We still have sufficient reserves to cover expenditures."

At its June 3 meeting, the council gave initial approval to the budget but scheduled Tuesday's special meeting to iron out any possible amendments or objections to the proposal. No action was taken on the budget Tuesday; the council will consider final approval of it on June 17.

At the June 3 meeting, Councilman Doug Richards and Mayor Gene Rhodes objected to the budget.

Richards was the only council member to vote against first reading of an ordinance adopting the budget, which is an increase of $2 million over the current one. He said the proposal should be cut back, not increased, to reflect the city's sagging sales-tax revenues.

He said Tuesday that the use of reserve funds to compensate for sales-tax revenue shortfalls appears to be deficit spending.

But Stoverink said that to use annually funded reserves doesn't constitute deficit spending. He explained that the city previously used the fuel-tax fund for general street maintenance but began in 1987 to set the money aside in a fund reserved for new street construction.

Also, the assistant city manager said the overall city finances remain in the black with an annual general operating reserve of about $3.5 million.

Stoverink said the transfers from the motor-fuels-tax fund are needed to compensate for an anticipated $600,000 shortfall next year in sales-tax receipts.

He said that unless retail sales in Cape Girardeau rebound, the transfers likely would continue through the next few years, jeopardizing future capital street projects.

City Manager J. Ronald Fischer said motor-fuels tax revenues are about $800,000 annually. He said the $600,000 transfer proposed in next year's budget would allow the city to continue carrying over some funds for capital street projects.

Stoverink said the city staff's cautionary statements June 3 concerning slipping sales-tax revenues were misconstrued by some people to mean that the city funds were depleted.

"We don't feel we're at a crisis point at this time," Stoverink said Tuesday. "We are making every effort to cut our costs when we can and generate more revenue."

But Rhodes said the budget transfers illustrate the city's vulnerability by relying so heavily on retail sales. "When you're depending on sales tax as much as we are, you're really a sitting duck for ups and downs," he said.

Fischer said that despite the decline in tax revenues, city services continue to expand in response to steady community growth.

"When you talk about growth of a community, there may not be a large growth in population, but you can really see the growth in services," Fischer said.

Stoverink reported that the city's street division significantly increased overlay, maintenance, and sign placement during the past four years. He also said that an average of 15 new subdivision plats are approved annually in Cape Girardeau.

Fischer said: "When you look at 15 new subdivisions each year, that's additional places to go pick up garbage, that's more streets to take snow off of, to put signs up on, and to make police and fire calls."

Stoverink said the police department reported a 40 percent increase in the number of events it handled in the past four years. Also, city demolitions of dilapidated structures tripled from 1986 to 1989, and the number of building permits issued during the same time increased 32 percent.

Police Chief Howard Boyd Jr. also said traffic counts at the city's 11 entrances have increased more than 18 percent in the past four years. "You can expect during the normal business day that our population would swell to about 75,000," Boyd said.

Stoverink said that all the expanded services have resulted in a larger and tighter operating budget each year.

"There really is a growing level of service needs that the city is faced with," he said. "We have to respond to that.

"We feel like we have done a good job of cost containment, but we do raise the red flag about the coming year's sales-tax revenue because that will have an effect on future budgets."