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Jefferson City Finance Committee continues sinking fund discussions

Jefferson City Finance Committee continues sinking fund discussions

September 21st, 2018 by Nicole Roberts in Local News

After the Jefferson City Budget Committee struggled to add money to its 2019 fiscal year "sinking fund" balance last month, the city's Finance Committee hopes an updated list of projects will help reach a solution.

Jefferson City's sinking fund goes toward major building repairs like roofs and HVAC systems.

The Finance Committee discussed the sinking fund Thursday and plans to continue discussions after city staff provides an updated list of projects.

Ward 2 Councilman Rick Mihalevich proposed putting $100,000 toward the sinking fund in the FY2019 budget during a Budget Committee meeting last month. He later removed this from the budget after he failed to find funds to offset the expense.

The sinking fund balance as of Sept. 12 sits at nearly $337,290, Jefferson City Finance Director Margie Mueller said.

Mihalevich said he wants to continue to build the fund so the council is not blindsided by unexpected facility maintenance projects.

An upcoming project the city may use the sinking fund balance on is to repair the City Annex Building roof, Mueller said. Repairing roofs, along with other unexpected facility maintenance, easily could wipe out the current sinking fund balance, she added.

In past years, the city has used the sinking fund to pay for things like overlaying the Jefferson City Police Department parking lot, installing a backflow preventer at the police station, and replacing the HVAC unit and standby power generator at City Hall.

While the FY2019 budget does not set aside money for the sinking fund, the city previously has allocated $200,000-$300,000 toward facility needs and maintenance.

In the 2017 fiscal year, the city spent nearly $23,284 of the $300,000 set aside in the sinking fund, Mueller said.

In the 2018 fiscal year, the remaining funds were reappropriated and added to the $200,000 set aside for that year's sinking fund. During the 2018 fiscal year, the city spent nearly $139,426 on facility improvements, Mueller said.

The city created the sinking fund in 2016 after concerns arose the city would not have enough money to address anticipated facility needs.

"We thought we solved the problem to this impending trainwreck and for it to go away seems odd," Mihalevich said, adding he wants to review the list of facility needs that generated the need for a sinking fund. "That list is not going away, so the rationale to generate $300,000 needs to be readdressed."

The list has not been updated in many years, Mueller said, adding city staff would work to provide an updated list to the committee.

The facility needs on that list are items the City Council will have to address at some point.

"It's not if these things are going to happen but when they will happen," Ward 1 Councilman Rick Prather said. "It's going to come back to bite us, so we might want to have a minimum balance we put in every year."

The committee said they also would consider setting a minimum balance for the sinking fund.

Financial update

Thursday's Finance Committee also included a financial update for the city.

The city collected $1,129,543 from the 1 percent sales tax from the April through June quarter and in July — $84,387 less than projected.

The half-percent capital improvement tax for April through June and in July brought in $545,731 — $13,912 over projections.

The half-percent parks sales tax brought in $545,842 — $728 over projections — April through June and in July.

The city accumulated $99,948 from the lodging tax in July.

Since voters approved the lodging tax increase in 2011, the 7 cents collected is more than $8.27 million. The 4-cent tourism fund has more than $4.83 million.

Hotel occupancy in July was 60 percent, a drop from 65.9 percent in July 2017.

Diane Gillespie, Jefferson City Convention and Visitor Bureau executive director, said the decrease was due to some tourist groups not staying in hotels due to lack of participation. The $10 million cut to the Missouri Division of Tourism is affecting all cities, she added.

Missouri's total occupancy rate is down from 70.8 percent in 2017 to 67.7 percent this year, according to documents the CVB provided to the Finance Committee.