By Seann McAnally
As 2011 approaches, Grandview officials are calling the budget forecast “grim.”
The Board of Aldermen discussed the next fiscal year’s budget at a work session on May 18.
Kirk Decker, assistant city administrator, said officials expect 2011 general fund revenues to be some $300,000 less than in 2010.
“Current estimates indicate that we will begin the 2011 budget with a $315,000 deficit, which means various cost-cutting and revenue enhancement measures will have to be explored and implemented to offset anticipated revenue shortfalls and cost increases,” Decker said.
The shortfall is due to several factors, he said, but the most obvious is that in 2010, the city received one-time funds that it can’t expect under normal circumstances.
Specifically, the city this year received about $214,000 from T-Mobile in a payment from a 2007 telecommunications lawsuit, and a $102,000 loss control credit from the city’s insurance company.
“Unfortunately, we can’t rely on those one-time revenue sources in 2011 and must rely on current revenues to fund operations,” Decker said.
Other revenue for 2011 is projected to be more-or-less equal to what it was this year, except for a few key factors:
Sales taxes dropped 9 percent in 2009 and another 7 percent in 2010. The sharpest decline was in the areas of food sales, vehicle sales, and construction-related supply sales. Decker said city officials expect this trend to reverse itself in 2011, but even with that increase, it won’t get back up to 2009 numbers.
Real estate assessments are expected to be up about ½ percent, but that won’t make up for a drop of 6 percent in 2009. That forced the city to raise its property tax levy to the maximum allowed by the state. Even if property values increase, they are still below pre-2009 standards.
The city receives payments for certain utilities through the so-called “franchise tax,” which includes electricity, gas, telephone, and other services. Sometimes what’s good for the consumer, Decker said, isn’t good for the city. For example, Missouri Gas Energy revenues are down almost 18 percent – a result of natural gas reserves being at historic highs, which has driven prices down.
“While this has been great for consumers, it has been detrimental to the city franchise revenues,” Decker pointed out. “While we expect a slight increase in 2011, it is not anticipated that those revenues will reach their highs of 2008.”
Meanwhile, other taxes such as state gasoline, motor vehicle sales tax and fees and certain bank taxes are continuing to decline because of the national recession, Decker said.
To make matters worse, Grandview is going to have some expenditures that it can’t do anything about. A new fire marshal will be hired in 2011, three full-time employees who are soldiers will return from active duty and will need to be paid again, and there is a 30 percent increase in costs associated with retired employees.
Health insurance premiums are also going up, Decker said, and city officials are exploring how to make that have a minimal impact on city employees.
Decker said the city has taken steps to minimize the impact of the deficit by applying for federal “Jobs Now!” grants that would fund several frozen positions for 12 months. However, Decker said, those positions would have to be re-examined for 2012, because the federal grants would run out by then.
The budget process will begin in June, and must be completed by July.