With anticipated tornado and flooding expenditures on the horizon, the city is preparing for a tight budget next fiscal year.
The Jefferson City Budget Committee met for the first time this year on Monday to discuss the proposed mayor-approved 2020 fiscal year budget. The FY2020 starts Nov. 1.
The overall proposed mayor-approved budget for the FY2020 is $65,147,788, which is 0.8 percent less than the FY2019 adopted budget.
The committee approved the proposed revenue amount for FY2020 - $32,906,901, an increase of $99,511, or 0.3 percent, compared to the FY2019 adopted budget. The proposed budget lists revenue increases from sales and use taxes, intergovernmental taxes, property taxes, and fees licenses and permits, among other items.
The sales tax revenue is expected to increase by 2 percent, or about $233,000, over the FY2019 budget, bringing in nearly $11.9 million in revenue. However, that slight increase is expected to be offset by the anticipated decrease in the telephone utility tax, Jefferson City Finance Director Margie Mueller said.
"There's currently a lawsuit up in Missouri Supreme Court to define what a telephone service is so it might be years before that's settled," Mueller said. "Until then, we're going to continue to see declining revenue that will offset the increase in our sales tax. That's pretty much why we're flat this year, even though we do have a 2 percent sales tax increase built into the budget."
The telephone utility tax is expected to bring in $1.8 million in the FY2020 mayor-approved budget. The Budget Committee anticipated more than $2 million in revenue from the telephone utility tax for the FY2019 budget.
The mayor-approved budget contains $32.9 million in expenses.
Also Monday, Mueller provided two spreadsheets to the committee - one showing the unassigned general fund balance if the city spends all of its money between 2020-24 and the other showing if it withholds at least 4 percent of its projected budget during those five years.
The 4 percent projected unexpended sheet is the "more realistic" approach, Mueller said. However, city staff is still uncertain how the May 22 tornado and recent flooding will impact the unreserved general fund balance.
While the FY2019 budget will reflect disaster response costs, there will be ongoing disaster recovery costs currently not funded in the FY2020 mayor-approved budget, Mueller said. This includes costs for city demolition, building permits, plan review activities and flood recovery at the Jefferson City Memorial Airport.
"The 4 percent is the most reasonable way of looking at it and it still is fairly conservative," she said. "With that said though, 2019 is an anomaly because we are going to be using probably all of what we've got budgeted to cover the expenditures that (are) in those invoices that we've had to pay for the tornado and flood. (The FY2020 budget) doesn't include any kind of projected expenditures for the airport and what we're going have to do there with the terminal, the tower, the lighting, any of that."
The city's financial policies require the unreserved general fund balance to be at least 17 percent of expenditures.
While the unreserved fund balance could help with flood and tornado expenditures, Ward 2 Councilman Rick Mihalevich said, he is concerned the city will go below the 17 percent mark.
If the city held back 4 percent, it is projected there may be nearly $8.26 million in the unrestricted fund balance in FY2020, putting the budget at a projected 25.1 percent of the originally adopted expenditures, according to the provided sheets.
By 2024, it is projected there would be nearly $6.4 million in the unreserved fund balance, which is 17.13 percent of the originally adopted expenditures, according to the sheets.
If the city spent all of its money during FY2020, its unassigned general fund balance would be about $5.6 million - 17.11 percent of the adopted budget, according to the sheets.
Over the next month or two, the Budget Committee will hear and discuss all city departments' needs and approve a budget for the FY2020.
The Budget Committee will continue its discussions at 5:30 p.m. Thursday at City Hall, 320 E. McCarty St.