The City of Lee’s Summit will be looking at more budget cuts.
City Manager Steve Arbo told the City Council’s Budget Committee on Oct. 8 that unless the city reins in spending or increases revenue, it faces a $1.7 million deficit in its general fund in the 2014-15 fiscal year.
In planning this year’s budget, Arbo said, the city expected the shortfall the following year would be at least $600,000. The city decided to delay deeper cuts, hoping that revenues such as sluggish sales taxes might turn around.
“What we know today doesn’t make it prettier,” Arbo said.
Overall, city staff expects revenues to increase 1.8 percent while expenditures for current programs, without cuts, will rise 3.5 percent.
That’s in part due to scheduled 2-percent average pay increase for employees and nearly 15 percent increases in health care benefits.
The general fund is where the city pays for most city operations, such as police, fire, inspections, snow removal, street lights and administration.
The general fund for fiscal year 2014-15, to begin next July, was to be about $60.4 million.
Growth in sales taxes from established sources also hasn’t rebounded to levels the city had prior to the recession.
The city hasn’t been able to recover $900,000 in utility taxes that was misdirected to Cass County, Arbo said, and the slow pace of negotiations makes the chances “remote” it will see any of that money in time to help.
The city had hoped to have some additional sales tax from a newly-approved Wal-Mart Supercenter, but a lawsuit has delayed construction of that store.
Anticipating the problems, the Budget Committee is getting an earlier start on its work for next year’s budget and Arbo asked for its members’ comments so he’d understand their views. He’ll report on his budget recommendation in January.
He told them the city could completely avoid the deficit and cuts by raising taxes. The City Council has the option of asking voters to approve a property tax increase to a full penny for every $100 of assessed value for the general fund, or a half-cent public safety sales tax, or a 2.25-cent use tax, Arbo said. A use tax is in effect, a tax on Internet sales or car sales outside Missouri and be equivalent to tax a resident would pay if they made that purchase in town.
Arbo said one area the city would consider to save money is asking city employees to cover a bigger share of the cost for health insurance or changes to plans for raises.
Other areas where there could be cuts included mowing, supports to boards and commissions, street sweeping, and in police and fire Honor Guard and special fire and police units.
Arbo said he does not have a specific list of proposed cuts at this point, those areas are only examples of thing that could end up on the chopping block.
Council member Rob Binney said the city needs to take a bigger share of Community Development Block Grants, maybe using it for public infrastructure and also recovering more of the city’s administrative costs.
Councilmen Bob Johnson and Derek Holland said it’s unlikely voters would support tax increases.
“I don’t think in this economic and political climate that we can go to citizens with this thing,” Holland said. “We’ve got some cuts to make, they’re going to be painful and they’re going to hurt people.”
Johnson made another pitch for cutting programs he thinks are unproductive such as branding. He also said he thinks some departments are bloated and need to justify the number of employees.
“We’re not going to get all the revenue we want,” Johnson said. “Some how we have to make a serious effort to cut.”
Council member Allan Gray said the city needed to look at revenue overall and at least consider asking voters for help.
“I’m not a believer that you can cut your way into prosperity,” Gray said. “It might help us this year, but look down the road, we have to pay attention to the future.”
He said when cuts go too deep city services become ineffective.
“There’s a bar we set as far as what citizens expect,” Gray said.
Arbo remarked that in his home town, the school board would threaten to cut football when it wanted a property-tax increase, but promised he wouldn’t use such a tactic.
“I don’t want to do that, I won’t come back with cuts to essential programs,” he said.