Thanks to some updated news about sales tax collections, the St. Charles County Council was able to approve a 2018 budget that includes some additional funding for a slightly larger employee pay increase.
The council approved its 2018 budget by a 6-0 vote at its Dec. 18 meeting. Councilmember John White [District 7] was absent. The county’s annual budget begins on Jan. 1.
The approved budget includes a 3-percent merit pay increase for county employees instead of the two-percent raise proposed in the draft budget. Also included is funding for a new assistant county prosecuting attorney and funding for a county election employee.
The council took action on the budget after working with county staff and hearing some belated but good news from state officials about county sales tax collections. Bottom line: the county will receive more sales tax revenue than expected.
County Finance Director Bob Schnur told the council that the county was notified by the Missouri Department of Revenue on Dec. 13 that information gaps on the amount of sale tax revenues the county was receiving had apparently been resolved and the county would receive additional payments.
The county began planning its budget based on a 3.43-percent sales tax increase at the end of 2016. The county budgeted based on a 3.25-percent sales tax this increase year. “So we’re right there where we budgeted,” Schnur said.
County officials struggled in preparing the annual budget this fall despite low unemployment and increased revenue from other sources. As County Executive Steve Ehlmann stated in a message accompanying his 2018 recommended budget, the county has experienced a decline in sales tax revenue despite good economic news.
In his message, Ehlmann noted 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 said. He predicted that, if 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 it provides 58 percent of revenue for the general fund. Ehlmann said declining sales tax revenue make it imperative that the county government “lives within its means.”
Schnur said the lack of sales tax revenue from online purchases will remain a concern.
“The internet and e-commerce are going to do nothing but continue to increase by double-digit percentages as time goes on because it’s becoming more and more popular,” Schnur said in an interview after the Dec. 18 council meeting. “So that still is very much a concern.”
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 the road and bridge, transportation, parks and recreation, and capital improvements. Those funds have independent revenue sources.
At the Dec. 18 meeting, Ehlmann lauded the work of Schnur and other staff members who, despite tight budgets, were able to come up with a more substantial salary increase that affects about 1,100 employees. County employees received a 1-percent pay increase last year.
“I’m sure it’s a Christmas present for all of them to be able to find out they had additional money and say ‘yes’ for a change,” Ehlmann said. The hard work for staff was to say ‘no’ to some funding requests, he added.
Schnur said the additional funding also allowed Ehlmann to suggest the hiring of another assistant prosecuting attorney to handle an increasing and more complex case load in the county prosecuting attorneys office and add a county election employee to the general fund.
In the last several years, sales tax and increased medical claims paid by the county’s self-insurance program ate up money in the general fund. The county transferred $2.1 million in 2016 and $2.5 million in 2017 to the self-insurance program to cover costs. However, health insurance claims only moderately have risen in 2017 and additional transfers aren’t considered necessary for 2018.
The county 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 road and bridge projects.
As in previous years, department heads were asked to submit budget requests for 2018 that had no increase over their 2017 operating budgets. Few new employees were added.
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 special general obligation bonds, totalling $16.1 million, approved by the council in July. The center is expected to be complete in August 2018.
According to the budget, 66 road improvement projects will be designed and built from approximately $81.5 million in the county’s transportation fund and $31.2 million from the road and bridge fund will be allocated for asphalt overlays and reconstruction, concrete street reconstruction and slab replacement, and crack sealing of county roads.
There is some good news regarding other revenue sources other than sales tax. Building fees may exceed the $1.05 million predicted in the 2017 budget, reflecting increased construction in the county. Recording fees also are expected to be up. And the county is expected to see an increase of 7. 6 percent in county assessed valuation due to reassessment.