Sedalia budget: Surplus offsets decline in revenue

The Sedalia City Council on Monday gathered for a work session to take a preliminary look at budget projections for the next fiscal year and review city services provided over the last year.

Despite projections of a slight decline in sales tax revenue over the last year, city staff anticipate a surplus of more than $840,000 for the fiscal year 2010 budget, which concludes at the end of March.

For the fiscal year 2011 general fund budget, the city is projecting $12.5 million in income and $14.7 million in expenses. Those projections anticipate no growth in sales tax revenue.

Interim City Administrator Brian Koral said although the city has adopted deficit budgets for the past five years, it has actually run at a surplus each year.

Mayor Elaine Horn said budgeting for certain expenses years before the money will actually be spent has allowed the city to build up a significant reserve balance.

“We budget things we don’t intend to spend money on, and we budget revenue conservatively,” Koral said. “The city holds back a minimum operating reserve that is 20 percent of general fund expenditures, and that gives us the ability as a city to weather economic downturns, as we’ve seen.”

The budget for next year is expected to include $350,000 for municipal software updates, $500,000 for the second phase of City Hall renovations, more than $250,000 to transition police department employees to the Local Area Government Employees Retirement System (LAGERS) pension plan, along with additional funding for the second phase of the downtown streetscape project and the reconstruction of the northbound lane of State Fair Boulevard.

The city’s budget for fiscal year 2011 is expected to benefit from a positive bidding environment for capital improvement projects. Koral said the state Department of Transportation’s contribution of $395,000 in grant funding for the reconstruction of State Fair Boulevard will cover the majority of the project’s expense after the city accepted a bid for about $500,000 less than engineers’ estimates.

“It is a good time to be bidding projects, and it is a good time to be hiring employees. And the only reason we can do that is because we’ve been building these reserves,” Koral said.

Personnel expenses are expected to increase more than $300,000 in the next budget, primarily due to higher insurance costs and the police department’s transition to the LAGERS plan. Koral said the city recognized that the 220 city employees represent a significant economic engine for the community, and has avoided holding vacant positions open, reducing hours, implementing furloughs or laying off employees.

Horn said national economic trends should not have a significant effect on the city’s budget process this year.

Council members on Monday also reviewed the scope of services provided by each city department over the last year. Horn said the review is designed to coincide with the budget process, so council members see how the funding is used in each facet of the city government.

“If you review it halfway through the budget year, it is easy to forget some of the details,” Horn said.

The budget will be presented to the City Council at its March 1 meeting, and council members are expected to consider and adopt the budget March 15.