Mr. Hugh Pavitt presented the results of the survey in detail, explaining the results that were received on each question and the implications of those results. Of particular note in the presentation was a general unwillingness on the part of residents to increase taxes to generate more revenues and a parallel unwillingness to substantially reduce services. Mr. Pavitt explained that this obviously leads to a disconnect when it comes to finding the most acceptable solution for the City’s revenue issues. In the question that asked which type of tax would be most acceptable (none of the above was not an acceptable response), the most positively received revenue increase source was business license fees. The second most acceptable increase was in the utility taxes, and the least popular was the creation of a property tax.

City Administrator Kuntz and Finance Officer Loehr provided an overview of the City’s financial situation year to date. Finance Officer Loehr explained that the 2003 capital budget was a little bit tight due to several one-time expenditures associated with the construction and opening of the North Pointe Aquatic Center. She explained that some of the revenues that went to those costs would be available in 2004. This opened the possibility of some of the Parks sales tax money being utilized to offset the even tighter Operations budget. Finance Officer Loehr said she does not see, at this point, any likelihood that the City of Ballwin will be able to offer any salary adjustment in 2003.

City Administrator Kuntz stated that from a financial perspective, the City of Ballwin, on the whole, is in pretty good shape. The problems occur in the operating budget because of the mandatory distribution of revenues between the operating and capital budgets. At this point, there are insufficient revenues feeding the operating budget to provide salary adjustments. Per policy, and in some cases by law, many of the revenues that feed the capital budget cannot be utilized in the operating budget.

Finance Officer Loehr said that year to date, the City of Ballwin is pretty much on target from a revenue and expenditures perspective in the operating budget. She noted that taxes are somewhat below expectations, year to date, on a percentage basis, but this has a lot to do with the accounting requirement that funds received in January and February that were actually collected in November and December, must be credited back to that year. She noted that in 2004, a similar situation will occur with revenues being credited back to 2003. Because of this, she believes that Ballwin is very much on target from a revenues perspective. She said that expenditures year to date in the operating budget are less than would be expected on a year to date perspective. She noted that it is difficult to state where the capital budget is at this point in the year. Many of the expenses that will be encumbered over the course of 2003 have not yet begun because they are associated with the capital works project.

Finance Officer Loehr stated that the changes to the fees that the Board of Aldermen has already authorized to begin in 2003 will generate approximately $213,000 of additional revenues to the City. The elimination of the recycling collection payment will add approximately $195,000 to the 2004 budget. If the business license and petition fee increases that are to be voted on in November are approved an additional $88,000 in annual revenues will be received.

City Administrator Kuntz said that given these financial situations and hoping that the economy will improve somewhat between now and a year from now, he is optimistic that 2004 will show a much better revenue picture for the City of Ballwin in the operating budget.

Alderman Easter asked if the City will have a better understanding at budget time of what the revenue picture will be for 2004. City Administrator Kuntz said he believes following the November vote, we will have a very good picture of 2004 revenues. He said that he is presently optimistic that another salary freeze will not be necessary in 2004. He is hopeful that the City will be able to offer salary adjustments in the 3% - 4% range.

Alderman Lembke asked, regarding the anticipated adoption of the ordinance that will transfer payment for recycling to residents, what procedure will be followed in the change over. He asked since residents pay 3 months in advance, for those that have already paid prior to the May 1 cutover to the new billing formula, if those residents will be retro actively billed the additional cost for the recycling pickup for the months that they have already. City Administrator Kuntz said he did not know. That may be a possibility. He will investigate this issue. Alderman Lembke asked if the City will be asked to pay the retro active portion for these residents. City Administrator Kuntz said that after the cutover date, the City will no longer pay any portion of the recycling fees.

City Administrator Kuntz said that he anticipates applying for a grant from the solid waste district to provide every resident in the City of Ballwin with a 90-gallon rollout container. The grant will cover the cost and he is optimistic that this would simplify some of the trash collection issues that the City has been dealing with.

Finance Officer Loehr briefly discussed the budget implications for the pay plan. She noted that the tight budget has forced Ballwin to drop the utilization of the comparison with ten other cities as a basis for the pay plan. She said the 3% estimated salary adjustment and would have a price tag of about $213,000 based on the current salary ranges paid in the City of Ballwin. She noted that the City intends to maintain the 75^th percentile of the ten comparison cities for purposes of establishing the entry level salaries for all positions, but is it not possible to keep every employee at their same relative position within the pay plan at current funding levels. City Administrator Kuntz explained that this results in compression in the lower salary ranges. This leads to a situation wherein employees with one or two years experience may be making essentially the same salary as new hired employees.

Alderman Robinson noted that he has recently had discussions with people outside of the City relative to merit based evaluations. In those discussions, some argued that when limited funds are available to provide salary adjustments, the money should be concentrated in the older better trained employees that are harder to replace. The theory behind this is that relatively new hired employees are not as productive and can be more easily replaced or eliminated in an organization. City Administrator Kuntz noted that the City of Ballwin does not presently have a problem with attrition at all and what attrition does occur, does not tend to be concentrated in relatively short-time employees. He noted that Ballwin utilizes a merit evaluation program for salary adjustments. There are no step adjustments in Ballwin and there are no cola adjustments in the Ballwin pay plan.

Finance Officer Loehr stated that if it is the desire of the Board of Aldermen to provide additional salary adjustments in 2004, it is probably best to anticipate the utilization of some portion of the Parks sales tax to offset operational costs in the Parks Department and thus free up operational funds for additional salary.

Finance Officer Loehr noted that as of the end of 2002, the City of Ballwin did not quite have 15% of the Operating budget as a reserve, but it was very close. The approved budget anticipates dropping the reserve to approximately 6%. As of this point in 2003, the City has not actually had to use any of the reserve, so it is presently at approximately 14% of the Operating budget.

Mayor Jones stated that he is cautiously optimistic that 2003 revenues will be higher than had been budgeted. He noted that the first quarter is up slightly in many categories from what would be expected year to date and he is hopeful that this will continue.

Alderman Buermann noted that he understands the need for utilizing the reserve and dropping it below the policy level of 15%, but he is of the opinion that once the revenue situation turns around, the City should establish a definite goal to return the reserves to the 15% mark within a specific period of time. It may not be necessary to do this within one year, but there should be a definite plan that is utilized as a part of the annual budgeting process to get the reserves back to the policy level.

Mayor Jones noted that the recently completed survey shows that people don’t want any more taxes and don’t want any reductions in services. He also noted that the information provided by the St. Louis County Municipal League shows that there are very few cities that have no property tax. Most of these are very small cities or cities that have very high residential property values. He suggested that perhaps the City of Ballwin should explore the possibility of reinstating the City’s property tax. He said the tax would certainly generate a fire storm at the time it was established, but he believes that in the long term it would probably be viewed as simply another minor blip among others in this period of poor economic performance.

Finance Officer Loehr noted that if the City were to initiate a property tax, it would have a substantially positive impact on Ballwin’s bond rating. She noted that property taxes are not considered economic activity taxes and, therefore, score higher when the bond rating analysis is being done.

Alderman Easter asked if Mayor Jones is recommending imposing the property tax rate that had been in effect at the time that the City rolled it’s property tax back to zero. City Administrator Kuntz noted that the City could only establish a rate that would produce the same relative revenues that the City received when the tax was rolled back. That will probably be substantially lower than the 27¢ rate that the City had previously imposed.

Alderman Robinson asked if the City could increase this property tax as a specific band-aid aimed at a specific problem such that it could be rolled back or reduced once that problem was resolved.

City Attorney Lucchesi suggested that the most equitable approach the Board could use would be to rely on the road condition survey as the basis for determining where expenditures are made. Alderman Robinson agreed but expressed concern about developing a mechanism that allows for the equitable expenditure of such revenues on a ward basis

Alderman Suozzi noted that in the past, different wards have benefited in different years. Because of the size of most capital road projects, it is very difficult to have an absolute balance of ward expenditures from year to year. It is her belief that, over time, all the wards are treated equitably. She was concerned that the relatively modest amount of property tax that the City could impose may prove to be inadequate for a quick resolution to the street problem. She said it may be better to go to the voters for a larger increase that would allow for a much quicker resolution to the road condition problem.

Alderman Buermann expressed concerns about doing a property tax after having recently promoted the lack of a property tax as part of the campaign to get the Parks sales tax approved. He stated that a utility tax would be a more acceptable approach to most residents. The City could utilize the AmerenUE lawsuits and the recent lower rates as a basis for the higher tax.

Mayor Jones noted that most people do not realize that they pay no property tax to the City of Ballwin. Because they already pay taxes to other entities, they automatically assume that the City gets a portion of that money.

Alderman Robinson stated that he believes the Board of Aldermen could sell a property tax if it is for street upgrades and maintenance. He recommended that the Board of Aldermen float the idea perhaps through the vehicle of the proposed letter from the Mayor which explores the issue of a more diversified tax base for the City.

Alderman Anderson stated that the rarity of cities without property taxes suggest that very few cities can exist without such a revenue source. The results of the survey also state that the citizens of the City of Ballwin are not particularly keen on the concept of higher taxes. He noted that the Board needs to be very careful about how this issue is raised with the public. He believes that given the current economic situation of the City, this may be a window of opportunity to raise the issue of a property tax.

Alderman Lembke asked about the issue of annexation and how it relates to the issue of finance. Will a property tax be necessary if the City allows additional annexations? On the other hand, is it possible that annexations would help guarantee a larger revenue from a property tax source?

City Attorney Lucchesi said he believes making any kind of connection between annexation and a property tax is probably not going to be viewed positively. He said it is important for the City of Ballwin to fully understand what the annexation implications are for property taxes if the rate is re-established.

Mayor Jones asked if the Board wanted to begin an information program over the next few months to educate the public on the City’s financial issues and in particular the possibility of a property tax. The Board was in agreement that this should be done. Alderman Suozzi recommended that part of the information provided should show what revenues are being collected and how they are being spent in surrounding municipalities.

There was no further discussion on this matter.

Human Resource Coordinator Morrison presented four options for the City’s annual calendar. Basically, 1) Keep the calendar and distribute as has been done in the past; 2) Do a simplified calendar that only has one picture and distribute as had been done in the past; 3) Do a simplified calendar and have it printed in such a way that an envelope would not be necessary for its mailing; 4) Keep the original calendar or use a simplified calendar, print substantially fewer copies and not mail them out, but have them available for pickup at various city facilities.

Ms. Morrison noted that a survey of 18 St. Louis County municipalities that formerly distributed city calendars revealed that only 4 are still printing and distributing this item.

Alderman Buermann said he likes the simplified format calendar without the mailing. He noted that the survey shows that the calendar is not seen as a very important communication tool to the City. Alderman Easter said that she believes a handout calendar is not a very good plan and that they will end up as litter in many instances. Alderman Gatton stated that he sees the Ballwin calendar as just another free calendar that comes out around the first of the year. Alderman Easter suggested that a city information sheet be enclosed with the holiday "Horizon" instead of a calendar. Although not as large, the information sheet could be in a format similar to the recreational program listing that is sent out with the "Horizon" twice a year. Alderman Anderson said that he likes Alderman Easter’s suggestion.

The Board was in agreement that the calendar would be eliminated and that henceforth an informational insert will be included with the holiday "Horizon" outlining some of the information that has traditionally been shown on the calendar. In addition, the "Horizon" throughout the year will contain additional information regarding upcoming meeting dates, meeting cancellations, etc.

There was no further discussion on this matter.

Human Resource Coordinator Morrison presented the survey results and committee recommendations to the Board of Aldermen. Ms. Morrison noted that the recommendations contained in the memo that went to the Board actually came from senior staff after reviewing the survey results and the Benefits Committee recommendations. Alderman Gatton stated that he believes the Board of Aldermen should not receive the holiday gift certificate that is given out to other employees. Alderman Easter asked about the possibility of giving out cash instead of a gift certificate. Alderman Lembke asked if this is perceived by the employees as an important benefit in the greater scope of all benefits given.

Alderman Robinson said it has been his personal experience that holiday parties are generally not very popular items. He believes that it is probably better to do away with the holiday party and use the money on some other benefit. Mayor Jones said that he did not support eliminating the holiday party.

Director of Parks and Recreation Bruer briefly presented her recommendations relative to employee utilization of recreational facilities. She explained her recommendation that all full-time employees and part-time employees working over 1040 hours per year would receive free use of the Pointe, the North Pointe Aquatic Center, and the Golf Course. If the employee chose to do so, they could purchase memberships at a discounted rate for their families that would allow them to utilize the Pointe and Aquatic Center, or the Golf Course, or all three. She noted that this treats employees that like golf, employees that want to utilize the Pointe, or employees that want to utilize the pool equally. All would get free use but their families would have to pay.

Alderman Buermann asked if these benefits would be available through payroll deduction. Ms. Bruer stated that this would probably be the simplest way to do this.

The Board of Aldermen agreed with the recommendations of staff regarding utilization of the recreational facilities and changes to the benefits package recommended by City Administrator Kuntz in his memo of April 23, 2003.

Alderman Buermann asked if it would be a good idea to establish the employee benefit committee as a standing committee of the City and utilize it whenever necessary to review benefit issues. Mayor Jones recommended that rather than create it as a standing committee, simply reserve the right to re-establish the committee as may be necessary when issues arise.

There was no further discussions on this matter.

City Administrator Kuntz briefly explained what the City’s past philosophy had been relative to accepting annexation petitions and processing requests for annexation.

Alderman Buermann said it is absolutely imperative that a full financial analysis be done of all annexation proposals so that the City has a thorough understanding of the short term and long term economic implications of an annexation.

Assistant City Administrator Aiken briefly presented an overview of the current financial issues that generally apply to annexations. In particular he noted that the pool distribution of funds has not changed substantially since the City’s most recent annexations in 1999. On the plus side, it is his understanding that the cost costs of certain types of repairs that are most commonly associated with annexed areas have also not increased substantially in that period of time. He noted that it would be necessary to do a full review of the financial model to make sure that other relevant issues have not changed substantially since the last time it was used.

Alderman Suozzi noted that there is more to an annexation than just the revenue implications. Issues of community image, location within the annexation area relative to surrounding municipalities, control of future development, and related items must also be considered as part of any annexation analysis.

Alderman Gatton stated that he believes that Ballwin needs to thoroughly evaluate all proposed annexations before allowing them to be placed before the Boundary Commission or on the ballot.

Alderman Easter stated that whatever annexations may be considered, the City needs to concentrate its funds on keeping the current City streets in good shape or improving them as may be necessary to acceptable standards. Ballwin cannot afford to take on any more serious street debt or maintenance responsibilities until this is done.

Alderman Lembke suggested the possibility of establishing a committee of the Board of Aldermen to thoroughly analyze the issues associated with annexation and the City’s past philosophy. The committee would then make a recommendation to the Board of Aldermen for any changes that may be necessary. The City will undoubtedly receive additional requests for annexation in the future. It is important that the City and staff have a definite approach to how these annexation petitions will be dealt with. The Board agreed to the establishment of such a committee.

There was no further discussion on this matter.

Alderman Lembke stated that per his recent efforts at walking his neighborhood during the campaign, he noted that the public that he talked with are very positive about the City of Ballwin. Although there are some people that have some problems and issues, it was the opinion of most people that he spoke with that the employees work hard, do a good job, and the elected officials are approachable and the city is well run.

The Retreat was adjourned at 11:56 a.m.
MC