Emergency funding, upcoming budget to determine Cape financial future

For the second time in three months, the Cape Girardeau City Council’s agenda includes an ordinance to appropriate money from the city’s rarely-accessed emergency reserve fund.

During a meeting with the Southeast Missourian editorial board Wednesday, Scott Meyer said this year was the first time he has accessed the city’s emergency fund since being named Cape Girardeau city manager in 2009.

The first city emergency was declared March 2 and authorized the use of up to $500,000 from the reserve fund to be used for operating and capital expenditures in response to a January cyberattack on the city’s information systems.

On Wednesday, Meyer said about $340,000 would be needed for cyberattack recovery — $160,000 for the city’s insurance deductible, overtime and facility impacts; and $180,000 to move city files to the cloud and improve its digital security protocols.

Meyer discussed plans to declare the COVID-19 pandemic as the second city emergency of the year during a May 4 City Council meeting, and pointed to the city’s revenue from Century Casino Cape Girardeau as a possible revenue stream to repay the reserved emergency fund over time.

According to a report prepared by Cape Girardeau controller and former finance director John Richbourg, city staff have estimated the COVID-19 pandemic and related “stay-at-home” orders to cause a negative impact of up to $4.5 million over the current and following fiscal year.

The COVID-19 emergency declaration would authorize the city manager to access the emergency reserve fund for “any costs or replacement of lost revenues related to the pandemic” not to exceed $4.5 million.

Repaying the reserve

While both the cyberattack and the pandemic are unprecedented emergencies for the City of Cape Girardeau, a similar version of Meyer’s proposed plan can be found in local records.

In 2008, the City Council authorized former city manager Doug Leslie to access up to $700,000 in city emergency funds after an ice storm caused more than two-thirds of the city’s households to lose power. Then-President George W. Bush later provided federal funds to reimburse some costs from the storm, which left two Missourians dead and 52 injured statewide.

In March 2011, a portion of the city’s up-front casino funds were used to restock the emergency reserve fund.

Now, city officials are considering a similar framework to repay the emergency reserve fund after this year’s emergencies.

The plan would require unanimous attendance and approval from all Cape Girardeau City Council members at today’s meeting, and, if approved, would suspend the existing casino fund policy and allow casino revenue to be used to reimburse the city’s emergency reserve fund.

“Any disbursements from the emergency reserve fund must be reimbursed within the next 10 years with at least 10% being reimbursed each year,” Richbourg’s report stated. “It is staff’s intent to make these reimbursements from current Casino Revenues on hand plus future Casino revenues.”

According to the report, the city had total emergency reserves of $8.5 million at the end of the fiscal year ending June 30, 2019.

Mayor Bob Fox said the city was fortunate to have previous city councils who followed the city’s charter by setting aside 15% of funds for the emergency funds.

“There are a lot of cities that don’t have those funds available,” Fox said.

While he acknowledged the necessity of suspending the city’s existing casino fund policies to repay the city’s emergency fund, the mayor said the change should not be permanent.

“I did say temporary,” Fox said about the change in policy. “I want it to go back to the way it was. That’s the way it works best.”

FY2020-21

In addition to the city’s emergency funding issues on the agenda for today’s meeting, the City Council must also reach a decision on a budget for the fiscal year beginning July 1 and ending June 30, 2021.

The proposed budget for the upcoming fiscal year accounts for $75,010,968 in total expenses, down about $5 million from the city’s budget for the current fiscal year.

According to Meyer, the budgetary cuts are an attempt to offset the recurring consequences of the city’s normal growth in costs outpacing its growth in revenue — a growing deficit many local officials attribute to the lack of a local use tax.

Fox and Meyer agreed the best solution to the loss of revenue could come through the passage of state Wayfair legislation, which would allow local municipalities to collect sales tax from online retailers.

In the meantime, the city has sought other solutions.

The total proposed budget currently authorizes 425 full-time and 501.51 full-time equivalent employees with a total operating budget of $59,073,572, plus an additional $8,930,493 in capital overlays.

A total of $260,265 in cuts were made by removing five full-time city positions — parks maintenance worker, recreation administrative secretary, police records clerk, deputy airport manager and city engineer. According to the proposed budget, the elimination of the city engineer position also resulted in additional contractual service costs of $78,000.

A citywide hiring freeze was also instituted as an attempt to reduce costs, Meyer said.

The city’s fire department would see a $124,209 reduction in overtime payments under the proposed budget, however, it does include $177,231 for three new firefighters with 75% of the firefighter costs funded by a three-year grant.

The budget includes $278,380 for five new police officers, and 92% of the costs for the new police officers would be funded through a service contract with Saint Francis Medical Center.

A stormwater coordinator position is also budgeted at $60,178 and would be funded by a parks/stormwater sales tax.

The proposal includes new alarm permit fees, false alarm fees and emergency incident fees.

Additional new measures in the proposed budget include a 2.5% increase in residential and commercial charges for water, and a $1 increase in monthly charges for residential solid waste and recycling. Both charges would increase with the first billing in July.