Lee’s Summit is planning to cut projected costs by $1.5 million for personnel into the 2016 fiscal year, confronting a trend where rising expenses are closing on slowly rising revenues.
City Manager Steve Arbo, at the April 29 city council’s Budget Committee meeting, announced a two-year plan to balance trends, implementing the plan’s first steps in the coming year’s budget.
Reductions could come primarily from a combination of attrition, privatization and adjustments to health plans.
The resulting budgets will keep the city above a near the 17-percent fund balance the council has set as a minimum to meet cash flow demand and unexpected expenses.
Arbo said Lee’s Summit continues to have its revenue grow, although at a slower rate than before the global recession of 2009.
“The good news is we exceeded projected revenue amounts,” Arbo said. “Even including the one-time money we didn’t get.”
Arbo was referring to about $900,000 that was misdirected to Cass County and was owed to Lee’s Summit from KCP&L. The city is trying to recover those funds.
The total budget is about $184 million, in several different funds, but much of the committee’s attention is focused on the general fund.
Councilman Bob Johnson, committee chairman, asked that committee members keep discussion of specific proposals to a minimum that night. The committee is to review the rest of the budget May 6 and 7, discussing its recommendations at those meetings.
The city’s fiscal year runs July 1 to June 30.
Total revenue for the general fund in 2014-15 is projected at nearly $58.9 million, only $52,944 over this year. Arbo proposes spending $60.8 million for 2014-15.
Arbo said the city is using conservative estimates for revenues.
His budget proposal includes a one-time amount of $700,000 to set up a trust fund to help retiring employees bridge the gap between retirement and Medicare eligibility.
It is intended to encourage long-term employees to retire, with the city back-filling positions with younger employees to create a future savings in personnel costs.
The city also is working on other measures to hold down expenses for health care benefits, Arbo said.
The percentage for health care in total personnel cost has jumped from 8 percent to 12 percent between fiscal years 2008 and 2015, Arbo said, with other benefits staying the same. The percentage for wages fell from 75 percent to 71 percent.
Arbo said the city continues to meet with employees to look for ways to change plans that help hold down costs and potentially help employees, such as starting health savings accounts.
Arbo said, for example, the city has been encouraging employees to avoid going to emergency rooms for minor illness and that has helped impact its claims.
The general fund is where the city pays for services such as police, fire and administration. It is the fund is where the city has the most flexibility for shifting resources and shoulders much of the personnel expenses.
The full $184 million budget includes funds for debt service or capital improvements are committed to specific projects approved by voters, and enterprise funds for water utility, airport and landfill operations are largely paid for by user fees, Arbo said.
The general fund, however, depends on property, sales and franchise taxes for its revenue and is affected by ups and downs in the economy.
Arbo’s plan does spend down some reserve money, with the aim of gradually adjusting the budget so that in outlying years revenues match expenses.
It also depends on future revenue in 2016 from a use tax, which would need to go before voters, and the Summit Place shopping center, which needs council approval.
The resulting budgets should be above the near 17-percent fund balance the council has set as its minimum for cash flow or meet unexpected expenses, Arbo said.
Arbo proposes cost saving measures over the next two years, such using police cruisers an additional year before replacing them and privatizing some concrete work now being done by public works employees.
Arbo is asking the council to continue funding the city’s 2-percent merit raise pool.
The council had some brief comments on the proposals.
Johnson several times ripped on a total of $265,000 intended to continue marketing the city under its community brand. He asked, as he has many times, if there’s evidence of increased revenue to the city as a result of the marketing.
“It would be hard to determine how much of the increase is specifically assigned to the marketing program,” Arbo said.
Councilman Allan Gray cautioned against cutting back too far on the work force.
“I call it dumb sizing,” Gray said. Two few employees doing too much work will send them to other cities or companies, he said. “We pride ourselves on being an organization people want to work for,” Gray said.
Councilman David Mosby said he supports the 2-percent raise pool to give employees who deserve it raises.
Arbo said even with tight budgets, raises are justified because he’ll be asking fewer workers to accomplish more.
“You can lose people important to you,” Arbo said. The city also incurs additional costs for training new employees, he said.
Councilman Rob Binney said the city does need to watch the “tide” of raises because “the wave that comes behind it will be bigger.”
The full budget analysis can be seen on the city’s website. Choose the LSTV tab, then pick the Other Council Committees link, click on the agenda button, and there is a link to the document.