ST. LOUIS • The city’s spending plan for the next fiscal year has a $10 million hole.
Sales and earnings tax revenues are flat or lagging so far this year, with overall revenue expected to be down by roughly 5 percent from estimates.
Most new revenue is designated for police and firefighter raises or transit improvements.
City leaders also stress the need to save for a rainy day.
Budget Director Paul Payne patched the hole in the draft 2019 budget that he sent to elected officials, but now, the tug-of-war begins over spending priorities.
Already, the Board of Estimate and Apportionment has restored $800,000 for neighborhood stabilization officers. Aldermen will have to find other places to make up that money.
As the aldermen begin their debate, some say too much money is being spent on policing, at the expense of human and social services.
At the same time, Mayor Lyda Krewson hopes to protect spending priorities, including funding for affordable housing and neighborhood improvements.
“We worked hard to really fund these programs that we’ve heard from the people and the Board of Aldermen over the past year are important to them,” Krewson said. “We want to retain those things if we possibly can.”
Crunching the numbers
The city gets most of its general revenue from its earnings tax, under which those living and working in St. Louis contribute 1 percent of their earnings. Additionally, the city takes in tax money on property, sales, utilities, conventions and tourism, and payrolls. It also gets revenue from grants, fees and fines.
Special revenue is up more than 25 percent, mainly because the budget will include a full year of income from half-cent sales taxes voters recently approved: Proposition 1 for economic development and transit improvements, approved in April; and Proposition P for police raises and other public safety initiatives, approved in November.
Most of the revenue from Prop P is allocated to salary increases for police officers and firefighters. The rest is to be spent on staff and raises in the circuit attorney’s office, after-school and youth jobs programs, 11 new recreation positions and two new human services positions.
Roughly $12 million in annual Prop 1 revenue is budgeted for transit improvements, with about $2 million each allocated for neighborhood stabilization, workforce development, public safety and infrastructure.
New expenses in the fiscal 2019 budget include first payments on the city’s Scottrade Center renovation debt and a state audit of St. Louis finances. The cost of that audit will be paid for over two to three years.
The budget also includes $3.7 million for demolition of vacant buildings, funding for a new cadet program to attract and retain police officers, and temporary air conditioning units for St. Louis’ Medium Security Institution, known as the Workhouse.
Additionally, there’s an increase in funding for affordable housing and ward capital funds — a yearly pot of money each alderman receives for neighborhood improvements.
The city’s Affordable Housing Trust Fund was intended to contain a minimum of $5 million a year, which voters approved in 2002, but has consistently been shorted for years. The budget in its current form puts $5.5 million in that fund.
The Board of Aldermen has its work cut out, said Alderman Frank Williamson, chairman of the Ways and Means Committee.
“It’s not pretty,” said Williamson, who represents the 26th Ward.
The initial budget proposal calls for a net reduction of 23 positions, including cutting 12 of the city’s 28 neighborhood stabilization officers, plus a supervisor. These officers (not police) act as liaisons between St. Louis residents and the officials, agencies and police officers who serve them. They generally give residents a person to address complaints to in each ward, in addition to the alderman.
Faced with outcry from residents and several aldermen, who say they lean on stabilization officers, the Board of Estimate and Apportionment restored those cuts.
Overwhelmingly the biggest chunk of the budget is allocated for public safety: nearly 60 percent goes to a department that includes police, fire, the building division, the excise division and corrections.
At the first public presentation of the proposed budget, a vocal crowd urged the Board of Estimate and Apportionment to focus on the public safety budget for cuts. Reducing the police department budget by 1 percent would protect social service priorities, they argued.
Comptroller Darlene Green, who sits on the board with Krewson and Aldermanic President Lewis Reed, voiced her support.
“The people have given us a road map. And I have repeated that,” Green said. “Let’s look at that 1 percent. That’s wide and broad, and it does not include affordable housing, it does not include ward capital.”
Williamson is also open to the idea, “if it’s not devastating to public safety.”
“We’re looking at all of the budgets out of each and every department,” he said. “We’re combing through it.”
But cuts to the police department are a nonstarter for Krewson, who ran for mayor on a public safety platform.
“That’s out of the question with me. We just went to the voters of the city of St. Louis and asked them to increase police salaries,” she said.
Shaky financial future
While a budget only maps out city spending for one fiscal year, officials are growing concerned about St. Louis’ long-term financial health and ability to save.
The city has roughly $82 million in pension obligations, and after raises connected to Prop P, that number will soar to about $87 million.
City budget writers also strive to keep a minimum of 5 percent of the budget in reserves. That’s money set aside to weather an economic downturn.
“We’re about to enter our 10th year of economic expansion. That also means we’re one year closer to the next recession,” Payne said.
The reserve target is $25.8 million, but sitting at $16.5 million, the current reserves haven’t recovered from the 2008 recession.
That kind of balance, on an overall budget of more than $500 million, is a “pittance,” Krewson said.
“It’s not enough for us to be fiscally responsible,” she said.
Krewson, Reed and Green have approved a mechanism laid out in the budget for setting aside money — an annual contribution set at 1.5 percent of salaries — to bolster reserves. But Krewson notes that the effort to put more money in savings may be at risk with the neighborhood stabilization cuts restored.