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Today's Poll!City facing nearly $2 million shortfall
Tuesday, February 26, 2013
Jefferson City is looking at various cuts as 2013 revenues are expected to fall below projections, a problem that apparently is not new to the city.
At a City Council work session Monday, interim Finance Director Bill Betts said the revenues for 2013 likely will come in nearly $2 million below projections.
“Where did this shortfall come from,” Betts said. “We were just wrong on a lot of these projections.”
But, as the council found out Monday, the city has been making decisions based on wrong projections for years. Betts said for fiscal year 2012, the city had about $34 million in expenses, but only brought in $32.8 million in revenues.
He said that’s because the city had not been budgeting funds to cover matching costs of grant money awarded to city departments; instead, it simply was documenting the grant funds as new revenue, without the accompanying expenses.
“This is terrible news,” Betts said. “No one’s excited about it.”
The shortfall and the realization that the city has been overspending caused concern and frustration among council members who questioned how it was possible that they did not know of these issues before Monday.
Third Ward Councilman Bryan Pope said he didn’t understand how the city could end the fiscal year in the minus and not inform the council.
“So we ended 2012 out of balance,” Pope said. “And we don’t know about it until right now.”
Fourth Ward Councilman Bill Luebbert said in his two years on the council, he has not been pleased with the city’s existing budget procedures, which are supposed to be changing before the next budget process.
“I have not been satisfied with the budget process,” Luebbert said. “This doesn’t generate a lot of confidence.”
The city’s 2013 fiscal year began Nov. 1.
The reason the council was unaware until Monday, City Administrator Nathan Nickolaus said is because of the accounting system used by the city and how it works. But past policies were also a part.
Betts said part of the problems in past budgeting processes was because the accounting staff in the Finance Department apparently were not allowed to be part of the budget process at all. Nickolaus said when he became aware of the policy, he changed it, adding that during the most recent budget process he had to order the accountants to take part despite the former finance director’s policy.
“I had no idea,” Nickolaus said.
He said past projections were not based on actual numbers but were instead a “shoot from the hip guess.” Nickolaus said the city is facing honest numbers, which can be painful, but that they have to wake up from “the fantasy world we were living in.”
To deal with the shortfall, Nickolaus proposed a series of budget cuts. They include:
• Not filling any vacant position the rest of the year and offering incentives for early retirement, resulting in an overall 8 percent reduction in workforce.
• City departments are all facing cuts, with the largest coming from the Public Works Department at a little more than $225,000.
• Reducing the city’s economic development contract with the Jefferson City Area Chamber of Commerce by $15,000.
“There are no more easy cuts,” Nickolaus said. “Every single cut that’s on there is painful ... this is very serious.”
The council is planning to meet again in open session after the City Council meeting next week to discuss the proposed cuts and potentially approve the plan. Nickolaus said the city needs to move quick, otherwise the figures could change and they could face deeper cuts.
“I would’ve appreciated knowing a little more about this material in advance,” Pope said.
Council members said they wanted more time to go through the information and proposal before coming to a decision. Mayor Eric Struemph said the council would move quickly, but with as much information as possible.
Sales tax figures adjusted
In other business, the council also was presented adjusted figures for sales tax E, which was in effect from 2007 to 2012, and sales tax F, the current city sales tax.
Betts said the city had projected $25 million coming from sales tax E, but that did not come in as expected. He said the alterations will not affect any promises made to the public, but required a shifting of funds to cover projects.
Nickolaus said sales tax E was projected to bring in $5 million per year. But in the best year of the five it lasted, it generated $4.8 million.
As for sales tax F, Betts said the city projected $26 million, or $5.2 million per year, but likely will see only $4.7 million per year, requiring some modifications to the spending plan.
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Comments
JCLifer 2 months, 3 weeks ago
Some good 'ol boy fell asleep at the tiller. Not surprised the way city hall has been spending like a drunken sailor. Time to cancel the convention center and use that money to fix the crumbling streets and storm sewers instead.
RobHunterJohnson 2 months, 3 weeks ago
True JC Lifer they city did fall asleep at the tiller! There would not be a problem if our Boat was setting over there in Cedar City creating revenue even on a snowy days! Our convention center would have been here almost 15 years, or more, bringing in all sorts of extra revenue, just look at Cape, Booneville, or St Joe! Logan, UT., Dayton, OH., or wherever Indiana were not a good comparison for good old JCMO! These towns with a boat are! Rob
rodinman 2 months, 3 weeks ago
The mayor, the administrator and the city council "own" the budget. It's your problem - fix it and don't point fingers at anyone other than yourselves. City financial shortfalls lead to unfilled positions, laying off of employees, delayed/postponed/cancelled infrastructure maintenance followed by filing for bankruptcy. Step one in the process.
JCLifer 2 months, 3 weeks ago
Take some money from the Park Board. They have too much now and are very wasteful.
rodinman 2 months, 3 weeks ago
CVB and Chamber of Welfare also need deep cuts in the amount of city funds they receive. Other items should be much higher on the priority list.
JCLifer 2 months, 3 weeks ago
Now that is mean. Without our tax dollars, who would pay for all their celbrations, parties, and balls? Those ladies like to dress up and have their society fun. Their little games and social activites are important to them.
kentheco 2 months, 3 weeks ago
It appears that the city administrator is trying to shift the blame for Jefferson City’s current financial situation, to the past finance director, who is not available to respond to his accusations. My question for Nickolaus would be why Jefferson City finances have not been audited. If the claim that City Administrator Nickolaus made that this has been going on for some time, shame on the Mayor and City Council members. If this is another oops, for which Nickolaus is known for, remember the email he sent concerning use of the dedicated sales tax that was on the ballot in 2012, shame on him.
JCLifer 2 months, 3 weeks ago
Was he counting on the sales tax to fill in the hole before anyone discovered the financial problems?
One thing for sure, the history of goof ups and craziness pounts to a lack fo control and proper management of city government.
bjjcm76 2 months, 2 weeks ago
StrongHow about selling the "bike bridge", because that worked out REEAL well.
melbrooks 2 months, 2 weeks ago
Want to venture a guess on how the bike/ped bridge was funded?
JCLifer 2 months, 2 weeks ago
$15 million of our tax dollars. Yet another great idea from our city "leaders".
Still waiting for the railroad Mud Tunnel, the Wears Creek Riverwalk, and the Gravel Bar Park. They will be great with the little convention center and the Butler Building basketball court rec center.
How many milluons of tax dollars have we paid fot the Tri-level, the 54-"S" curve, and the Dix Road connector? How many people have been killed over the years? How many dollars of property damage?
How much was soent on the Rassmussen Yacht Club?
Insanity is repeating these failures over and over. BTW: Where are the high wage tech jobs?
melbrooks 2 months, 2 weeks ago
Not $15 million, $6.7 million. You're off by a factor of two. Sleeper (below) knew the correct number. Approximately 84% of the money came from federal TEA-21 enhancement funds, which would have been spent elsewhere if not here. The rest (called matching funds) came from a combination of DNR, City and private donation funds. Local dollars were leveraged at a 6:1 ratio.
JCLifer 2 months, 2 weeks ago
Seems like the city needs to hire a dedicated CPA Auditor/Finance Director to manage the city finances. The job of monitoring the money and financial waste is way too important to let a lawyer or a computer netwoking technician do it. Luckily, the City can easily hire an excellent CPA away from the State for less than $60k.
sancho 2 months, 2 weeks ago
JCLifer, if we paid for the pedestrian/bike bridge with our tax dollars why did they name it aftr Pat Jones? And why did they honner her when the bridge was dedicated. I mean if you and me paid for it, they certainly made a big fuss over her.
bjjcm76, if you ever spend time in downtown Jefferson City in the Spring, Summer or Fall, you will probably see more bicycles than you used to see, parked while the owners, from all over the country and even the world, have lunch at Cafe de Roma, Arris' Pizza, or any of the other great places downtown. Now that we have a safe way for people to cross the bridge on bicycles, more bicyclists are stopping in Jefferson City. Now that we have the pedestrian/bike bridge a lot more people comment on bikekatytraildotcom about having a great time in Jefferson City as they cross the state on the Katy Trail. So yes, that did work out real well for Jefferson City.
connor 2 months, 2 weeks ago
And in about two hundred and fifty six years those $20.00 lunches and $3.00 tips will pay for the bike bridge.
Can't wait.
JCsleeper 2 months, 2 weeks ago
Think the bike bridge was $6.7M and mostly funded by MO-DoT. Interesting that it was built prior to much needed pedestrian access for folks on MO Blvd. Water under the bridge at this point. Concerned that the JC is broke, yet wants to subsidize a $9M conference center (with lower than projected lodging tax returns) amongst other pet projects. They are now considering using some of the Capital Improvements sales tax revenue to beef up general sales tax revenues. That is not why folks voted for Capital Improvements sales tax. Taxpayers might remember this next time this comes up for a vote. JC should not be playing a bait-switch game with tax revenues. JC needs to demand strict accounting and scrutinze entities it subsidizes and reduce accordingly for poor performance. Capital Improvements revenues need to be used to rebuild JC's decrepit infrustructure exclusively.
melbrooks 2 months, 2 weeks ago
Sleeper, as I understand it, it's the other way around. The city is considering using some Capital Improvement dollars to fund some infrastructure projects which were slated to be funded via general revenue. Not all capital improvements are funded from the Capital Improvement tax--some have been funded out of cash flow.
kentheco 2 months, 2 weeks ago
The bicycle bridge confirms the problem that exists with MO-DOT Engineers. Have you ever tried to ride a bicycle in a narrow hallway with square corners? Like the Tri-Level, it is an extremely poor design for what was/is needed. In addition, how much did it cost Jefferson City to keep people off it last Fourth of July and will they do it again this year?
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