The meeting was called to order by Chairman Buermann at 6:02 p.m. in the Board room at the Donald “Red” Loehr Police and Court Center at 300 Park Drive.  The meeting was open to the public and notice was posted in the 24-hour lobby of Ballwin Police Department, the Government Center, and The Pointe on the Friday preceding the meeting.  Those in attendance were Chairman Buermann, Committee members McDowell, Gatton, and Fleming.  Also in attendance were Alderman Lembke, and Assistant City Administrator Aiken and Finance Officer Loehr.

Finance Officer Loehr presented the handout materials regarding revenues.

Chairman Buermann asked about new subdivisions.  When they are built, we don’t get the per capita until the next census, but do we get other taxes?  Assistant City Administrator Aiken said that anything that is population based, we won’t get until the next census.  The revenues, such as utility taxes and permit fees, are received as soon as the houses are built and occupied.

Finance Officer Loehr presented the sales tax breakdown.  She said even though the capital improvement and parks sales tax are each a half cent tax, the capital improvement tax is shared with the pool and the parks tax is not.  She said 2004 tax receipts went down from 2003, although the TIF receipts were slightly up. 

Alderman McDowell asked about the average monthly sales tax breakdown.  Finance Officer Loehr referred to the section in the handout materials.  She said it is about $375,000.  She said the fund balance fluctuates.  The 2004 year end fund balance appears to have gone up almost a million dollars.  This is because of the savings on health insurance, not hiring replacement employees, revenues were good in the recreational facilities, and there was careful spending.  We didn’t have to use any reserves for 2004. 

Chairman Buermann asked if there are any trends that she would like to point out.  Finance Officer Loehr said that Ballwin is very dependent on sales tax.  It fluctuates some, but is basically stagnate.  On the plus side, personnel cost are holding at 75% of the operating budget. 

Alderman Gatton asked if the reserve fund ended up at about the same level as it started.  Finance Officer Loehr said that 10% of the operating budget amount is invested all the time.  Invested money is still short of the 15% goal.  The operating fund was running tight from a cash flow perspective at the end of the year, therefore, we didn’t invest more money.  We are still short of the target number but we didn’t take any out either.  Alderman Gatton asked for a list of the top 10 net sales tax revenue generators for 2004. 

Alderman Gatton said he owns commercial property and he signs 5-year leases with his tenants.  He asked, if Ballwin adds a commercial property tax, will Ballwin commercial property owners be able to pass that cost along to the tenants.  Because of the nature of his lease, he is not able to.  He just received a huge tax increase from the County.  He is wondering if we will be putting the property owners in jeopardy if we consider a commercial property tax.  Alderman Buermann said that the intent was to see if this was a revenue option.  The prudent thing to do, from a business standpoint, would be to look at this among other revenue source options and see what kind of revenue will be generated.  If this will generate only $25,000 per year, we will have to determine if it is worth the loss in goodwill to potentially alienate business owners.  We can’t overlook the fact that businesses contribute to Ballwin Days and other civic projects in addition to the revenues they generate from taxes and fees. 

Alderman Gatton said that the business owner and the property owner who pays the tax are not always the same. 

Alderman McDowell said that he is concerned that in 2005 when vacant positions are filled, we will not have the surplus we have had previously.  Finance Officer Loehr said that having full staff and receiving the same percentage of salary increase, should utilize 100% of the budgeted expense for personnel.  Alderman McDowell said that if our facilities are operating efficiently without having replaced certain personnel, the cuts could potentially be permanent.  Assistant City Administrator Aiken said that if the Police are minus employees, they end up with more overtime because there aren’t enough people to cover their needs.  When The Pointe cuts staff, the customer service goes down and so potentially do revenues.  Fewer employees in Public Works will mean fewer potholes filled and a longer leaf season.  You have to be careful when you start eliminating positions.  The current staffing levels have already been trimmed to meet minimum needs.  There is little fluff in these budgets.

Alderman Gatton asked if there are still grants available to help cover some of the Police overtime.  Captain Saulters said there are some small grants for special purposes.  Finance Officer Loehr said that we don’t usually budget for the small grants because we don’t know if we are going to get the grant. 

Alderman Fleming said that in looking at the sales tax trends from 1997 – 2004, the trend is up rather than flat.  He said the expenses should continue to decrease while the revenues are holding even.  We can’t make revenue decisions as to what new taxes should be proposed to the voters if any, until the comprehensive plan is complete.  Maybe the future is not in retail any longer.  Maybe the future is to build a 5-story office building on the Value City site.  In that case, commercial property tax would be a better thing. 

Alderman Gatton said that about 25% of the businesses presently in Ballwin do not generate sales tax.  Chairman Buermann said that there are new businesses opening in Ballwin.  A lot of these new businesses are service orientated and are not sales tax generators.  He said that office space, although it is desirable to have in our community, does not directly generate much sales tax revenue either.  He said he does not like the large lot being planned for the car storage lot because Ballwin won’t receive anything from this and will have to provide service to it.  We have been relying too much on sales tax.  Some business owners and property owners are not paying their fair share for the services they are receiving. 

Alderman McDowell asked what is the rate of business turnover in Ballwin.  Assistant City Administrator Aiken said that this has not been tracked, but can probably be deduced from historical business license records.  Alderman McDowell requested a report on how many businesses were lost in previous years, and this can be compared to what we are losing this year so far and the money that would be generated from those businesses. 

Alderman McDowell asked what is the lead time in replacing an employee.  Assistant City Administrator Aiken said that the staffing is tight.  If he loses an inspector, he is down 25%.  In the busiest time of year, inspections are booked a week out.  If the inspectors are down 25% at this time, we will be way behind and customer service will suffer.  If an inspector is lost in September, we can take longer to fill the position because we are going into the slower time of year. 

Alderman McDowell asked how much the administrative cost is projected to increase in the coming year?  Finance Officer Loehr said 4-5%.  Alderman Gatton said that administrative staff has not been increased over the last year.  The budgeted pay raise is the only increase.  Finance Officer Loehr said that expenses have caught up with revenues.  Assistant City Administrator Aiken said that we used to be in a position that annual revenues increased more than expenses.  He said the costs are now increasing at a greater rate.  As a result, we are falling behind.  Finance Officer Loehr said the restructure of the business license fee helped increase revenues. 

Alderman Fleming suggested increasing the utility tax from 5% to 7%.  Since there isn’t a property tax in Ballwin, this may be easier for the residents to understand and support.  Finance Officer Loehr said that this is an economic activity based tax so if the utility receipts in general go down, this revenue would also go down.  Alderman Gatton said that in the past, we traded a 2% utility tax for a capital improvement sales tax.  Chairman Buermann suggested that this be put into the survey regarding raising the utility tax from 5% back to 7%.  Alderman Fleming said that in general, no one ever thinks it’s a good idea to raise a tax.  If the residents were given a table showing that the Ballwin property tax is zero compared to some surrounding communities, and Ballwin’s utility tax is 5% compared to others that are 7% or higher, he believes the residents would accept this.  Chairman Buermann said that the utility tax is more palatable on a monthly bill instead of one bill at the end of the year like property taxes. 

Alderman Gatton said that a commercial property tax would be beneficial.  A commercial property tax does not subject us to the plus and minus cycles of retail sales.  The property is worth the same amount of money regardless of the volume of sales. 

Finance Officer Loehr said she called the Hummer dealer because she noticed that we have not ever received any sales tax from this business.  They said they have not ever sold a vehicle to anyone in Ballwin.  When a person buys a vehicle from this Hummer dealer, and they do not live in Ballwin, we get only a part of the pool. 

Chairman Buermann asked City Engineer Kramer regarding the truck ports, if he would do research regarding purchasing this improvement in a manner similar to that of the salt dome.  Chairman Buermann said that the salt dome was going to cost about $400,000 or more and was spread over a 4-year period of time.  Finance Officer Loehr said that Commerce Bank, who financed the salt dome, could be interested in this.

Chairman Buermann asked how are we doing on our investments.  Are there more short term investments rather than long term investments?  Finance Officer Loehr said it has been City Administrator Kuntz’s choice to stay with short term CDs in local banks during this period of low interest rates.  The CD rates are gradually going up.

Alderman McDowell said that plans need to be put in place that will generate additional revenues.  Unless we annex new areas or otherwise increase revenues, we are not going to see growth continue.  Pulling from operating costs is not wise.  Quality of service has to be maintained.  Once that drops off, it’s hard to catch up. 

Alderman Gatton said that there doesn’t appear to be anything that can be recommended to the Board or the city residents at this time. 

Chairman Buermann said that the next Finance & Administration Committee meeting will be on    April 11 at 6:30 p.m. 

Adjourn:  A motion was made by Chairman Buermann and seconded by Alderman Gatton to adjourn.  There was no further discussion and the meeting adjourned at 6:58 p.m.

 

Chairman Ken Buermann

ATTEST: Robert A. Kuntz, City Administrator 

MC