The Jefferson City Finance Committee on Thursday discussed where to find funds to replace aging vehicles in several city departments.
Ward 4 Councilman Carlos Graham suggested the committee consider a sinking fund during the final Jefferson City Budget Committee meeting to replace vehicles for the Jefferson City Police Department, Jefferson City Fire Department and Jefferson City Public Works Department.
A sinking fund is an emergency fund where money is placed periodically to repay debt or replace assets. The city has an ongoing infrastructure/facility needs sinking fund that was created in the fiscal year 2017 budget.
That fund has approximately $275,667 in it, Jefferson City Finance Director Margie Mueller said.
A similar fund for fleet replacement could help move the large number of vehicle replacement requests along. The city will continue a cycle of not funding new vehicles if a plan is not put in place, Graham said.
"I know that fire, police and public works have all asked for vehicles," Graham said. "I think, if they continue to use their sales tax, the only thing they would be able to purchase is vehicles, and there are other things that are certainly needed in their departments."
The Jefferson City Public Safety Committee last month discussed replacing 21 vehicles by 2021 due to high mileage. The department submitted a pink sheet - a funding request - for 13 vehicles to the Jefferson City Budget Committee.
Those vehicles were not funded in City Council-approved fiscal year 2020 budget.
The Public Works Department submitted 12 pink sheet items that were not funded in the FY2020 budget. Some of the department's vehicle requests included three 1-ton heavy-duty trucks, a replacement street sweeper and a street marking/paint truck.
The Jefferson City Fire Department requested two response vehicles that were not funded in the FY2020 budget. Fire Chief Matt Schofield said the department is about one and a half years into a 10-year purchase cycle.
Replacing the entire front-line fleet could cost around $6 million, Schofield said.
The department has special use fleet and a reserve fleet, which are older vehicles, only used when front-line vehicles are down.
"Those older vehicles that are in the reserve fleet or special use fleet continue to age," Schofield said. "I can tell you that our average fleet age today, of the entire fleet, is still 10 years old even though the front line, the most critical pieces, are only a year old."
Graham proposed the city put an additional percent in the unreserved fund balance to cover fleet replacement.
At the end of a fiscal year, departments' unspent funds go into the city's unreserved fund balance - similar to a savings account. Those funds are used mostly for one-time large projects. The city's policy recommends putting a minimum of 17 percent of unexpended funds in the unreserved fund balance.
The Government Finance Officers Association recommends a minimum saving of no less than two months of regular general fund operating revenues or expenditures for all general-purpose governments, Mueller said.
"That's where we come up with the 17 percent," Mueller said. "Two months of the year is about 16.7 (percent)."
Ward 2 Councilman Rick Mihalevich said the percentage is a good mark for the city.
The city's policy notes if the 17 percent is not met, the finance director and city administrator should work to return to the standard.
For FY2019, the year-end unreserved fund balance projection is 17.16 percent, or $5.6 million. Approximately 17 percent would be $5.5 million.
"Certainly, I know that we have discussed that 17 percent is our threshold," Graham said. "I'm not saying we should reduce that threshold ever. I think my concern is the fact that after budget is over, we are brought with a bunch of items that are needed by different departments. I know that the fleet is certainly something that's a big item that certainly costs a chunk of money. I know we're also dealing with stormwater issues as well."
His proposal would roll over each budget year and only be used for fleet replacement, Graham said.
"I think that we have to seriously look at where can we start," Graham said. "If we continue to not do anything, we're going to continue to be in the same situation we're in - which is not being able to provide vehicles. I'm not asking to go below fund balance. What I'm asking is a percent above the fund balance off the top be set aside to go toward the fleet replacement that we are faced with each and every year."
That goal would be tough for FY2019 or FY2020, Mueller said.
Estimated unreserved fund balance numbers were calculated before the May 22 tornado and spring flooding.
"With the flood and tornado expenditures that are being paid for in FY2019, there's not going to be anything above 17 percent," Mueller said. "You'll have time to decide what you want to do in future budget years because we're not going to have that for FY2019 and into FY2020 as well."
Ward 3 Councilwoman Erin Wiseman said the fleet-replacement funds have to come from a specific place. She proposed the city look into gaining a percentage of the Cole County Law Enforcement Sales Tax, which voters approved in 2007. The half-cent tax was to construct the county jail which opened in 2011. The tax will decrease to three-eighths of a cent in January 2023.
"I can't tell you that anyone is going to want to let us in on that," Wiseman said. "But the fact is we are part of the county. Jefferson Citians are citizens of the county, and buying a couple of police cars should be a drop in the bucket for $8 million."
Cole County Finance Officer Debbie Malzner said about $8 million is in the account used for the building and to fund the Sheriff's Department operating budget.
Jefferson City Administrator Steve Crowell said the bigger discussion may be how the city could increase its operating budget.
"There's a challenge there," Crowell said. "That's the exercise you all go through every year is how to spend whatever the operating funds are that are there. Maybe it's a discussion on how do we increase some of that revenue."
Ward 1 Councilman Rick Prather suggested a use tax could be one way to increase revenue and dedicate funds to public safety.
"Other counties have passed it, and they dedicated a good part of it towards public safety," Prather said. "They believe that's one reason why it passed."
The city proposed a use tax to voters in August 2018. Voters did not approve the tax, which would have placed a 2 percent tax on all out-of-state purchases to be used, stored or consumed in Jefferson City.
Cole County has a use tax of 1.5 percent. Missouri has a use tax of 4.2 percent for people who store, use or consume tangible personal property in the state, according to the Department of Revenue.
City staff plan to research the taxes and other ways to increase revenue.