COUNCIL CONSIDERS CITY BUDGET; SHRINKING CASH RESERVES IN GENERAL FUND TO BE DISCUSSION ITEM

When the Cape Girardeau City Council meets tonight to review next year's budget, one item on the table is restoration of depleted cash reserves in the city's general fund.

A special budget study session is scheduled for 5 p.m. today at the city manager's office in City Hall. A public hearing on the budget will be held Monday during the council's regular session.

Assistant City Manager Al Stoverink said Wednesday the budget proposal includes $169,000 in excess general fund income that would help establish a "healthier" cash reserve.

"In 1989-90, we had just over $1 million for the general fund in cash reserves," he said. "That's typically been a figure we've tried to maintain."

But decreased general fund revenues in the past two years in particular a drop in sales tax receipts have depleted the cash reserve, which now stands at about $500,000.

"When we drop down below that as we have the last two years, we get into a position where we have to do some inter-fund borrowing prior to our big tax collections in January," Stoverink said.

"Ideally, we would want to keep enough cash balance at end of the fiscal year to carry us through, and $1 million is a pretty good figure for that."

Stoverink said the cash reserves are lower than they've been in several years.

"We need to replenish that, which is why you see that we're proposing in the general fund $169,000 net income to try to start building that back up," he said.

"The council will look at how fast we need to attack that problem, but we do need to replenish that general fund cash balance and try to get it back around $1 million."

Although the budget shows a total "reserve fund balance" in excess of $14 million for all funds, Stoverink said most of that figure accounts for inventories, accounts receivable and other "non-cash" assets.

"The ending cash balance is really the figure we have to pay close attention to in terms of having to pay the bills," he added.

"The fund balance figures are important in terms of overall condition of city and financial planning, but ultimately the real cash on hand is that cash reserve balance."

Through a number of personnel changes and a reduced capital improvements plan, the proposed budget for the 1992-93 fiscal year is 3 percent smaller than the current budget.

A staff reorganization plan is expected to reduce costs about $200,000, and the capital improvements budget this year was reduced about $10 million over five years. Aside from those projects budgeted for the coming year, financing for much of the plan remains in question.

And although the proposed package is smaller, it doesn't include any cuts in programs or city services.

The city staff this year also began to place increased emphasis on user fees reflective of costs associated with city services.

Stoverink said the cost-cutting measures have been made in response to shrinking revenues and are aimed at preventing a fiscal crisis rather than having to later react to an emergency.

He said that when the staff this year closely examined fees and utility rates, they found that operating costs have increased at a rate well within inflation.

"Our day-to-day operating costs have increased less than inflation," Stoverink said. "It's the costs that have come with federal and state mandates and other things beyond our control, like the disposal contract for solid waste for example, that continue to increase at a much higher rate."

As those costs have increased, other areas of the budget have suffered, namely capital equipment purchases and capital improvements.

"The capital equipment replacements for two or three years have been lacking," Stoverink said.

The assistant city manager said that police cars, for example, previously were replaced at a rate of five or six each year.

"We dropped that down to three two years ago," he said. "As a result, we're getting police cars out there with a lot of miles on them.

"This budget still reflects replacing only three of them, but I think it will be the last year we'll be able to manage that."

But equipment purchases also must be balanced against capital improvements, such as new streets and sewers, and city employee salaries and benefits.

"In the end when you get right down to it, the major budget priority the council faces is how much you allocate to capital equipment versus capital improvements projects versus payroll and benefits of our employees," Stoverink said.

In another attempt to improve efficiency, the city two years ago instituted a "market-based" pay plan for employees, he said. And although across-the-board pay increases have been eliminated, most employees have seen modest salary hikes.

"Over the last five years or so, the employees have received, generally speaking, pay and benefit adjustments that reflect very closely or are probably a little bit ahead of inflation," he said.

The council Monday will consider first reading of a measure adopting the budget, and if there are no changes, will give final approval June 15.