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Ehlmann submits recommended 2018 budget amid sales tax concerns

Buying online could have an impact on the financial issues facing St. Charles County government in coming years.

It’s an issue that has county officials concerned despite a better economy, low unemployment and increased revenue from other sources. As they prepare to adopt the county’s 2018 budget, no later than Jan. 1, they’re thinking ahead.

In the message submitted with his recommended 2018 budget, County Executive Steve Ehlmann noted that the county has seen the growth of sales tax revenue decline dramatically this year. He suggests that if current collection trends continue through the end of the year, sale tax revenue will fail to keep pace with the 2017 inflation rate.

“We believe this decline is largely attributable to the rapid expansion of e-commerce internet sales and as e-commerce continues to expand, traditional local sales tax revenues could continue to decline,” Ehlmann states in the executive summary of the message. “As the cost of providing essential services continues to rise, and should sales taxes fail to meet expectations in 2018, we will have no choice but to invoke extensive cost-cutting measures throughout county government departments.”

Sales tax is an issue because its revenue makes up 58 percent of the general fund. Ehlmann said declining sales tax revenue makes it imperative that county government “lives within its means.” Beginning in 2018, all vacant positions be evaluated as to whether they can be consolidated rather than being filled so to decrease total full-time employees, excluding law enforcement positions.

Ehlmann proposed a “fiscally conservative budget” that calls for $81.4 million in total general fund expenditures in 2018, which includes funds and emergency reserve funding appropriated for 2017 projects to be completed next year. The general fund supports most of the county’s administrative departments.

The budget also includes other special funds, including road and bridge, transportation, parks and recreation, and capital improvements. Those funds are supported by other revenue sources.

The proposed budget includes a 2-percent merit pay increase for county employees, but medical insurance costs for employees is going up.

In 2016, increased medical claims paid by the county’s self-insurance program ate up money in the general fund.  The county transferred $2.1 million to cover insurance costs in 2016 and $2.5 million in 2017. The budget message notes that health insurance claims have moderately risen but additional transfers aren’t considered necessary for 2018.

The county also may spend $7.1 million from the parks and recreation fund for continued development of the new county park at Pitman and Kisker roads, along with finishing the county’s emergency operations center in O’Fallon and completing road and bridge projects.

Few new employees are expected to be added. Three positions are funded through special funds in the budget – a system engineer for emergency communications and two parks and recreation department maintenance workers. There are no new full-time positions for general fund departments.

As in previous years, department heads were asked to submit budget requests for 2018 that had no increase over their 2017 operating budgets. Ten new general fund positions were requested and none were granted.

The county proposes to allocate $17.2 million from the county’s capital project fund for the completion of its new emergency operations center in O’Fallon. Most of the $24.4 million cost of the center is from the sale of $16.1 million special general obligation bonds approved by the council in July. The center is expected to be completed in August 2018.

Sixty-six road improvement projects also would be designed and built from approximately $81.5 million from the county’s transportation fund and $31.2 million from the road and bridge fund for asphalt overlays and reconstruction, concrete street reconstruction and slab replacement, and crack sealing of county road.

There is some good news regarding revenue sources other than sales tax. Building fees may exceed the $1.05 million in the 2017 budget reflecting increased construction. Recording fees also are expected to be up. An increase of 7. 6 percent in county assessed valuation is expected due to reassessment.

Ehlmann also notes that tax increment financing [TIF] have reduced the county’s net sales tax collections in 2017.  TIF payments to cities in 2017 are totaled $795, 136, down from $855,903 in 2016.


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