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O’Fallon proposes 2021 budget, five-year capital improvement plan

At the Nov. 12 City Council meeting, Bill No. 7258 proposing a 2021 total expenditure budget of $96,497,478 (including transfers) was given a public hearing and first reading. Another item, Bill No. 7264, proposed a five-year capital improvement plan (CIP) with $90.3 million planned for 2021. It was also given its public hearing and first reading. 

The 2021 budget

Budget workshops were previously conducted on Oct. 12, 15 and 22, and adjustments requested by the city council are included in the proposed budget.

The proposed 2021 budget includes anticipated revenues of $93,450,415 and expenditures of $96,497,478 (including transfers).  The shortfall between revenue and expenses is made up of carryover amounts in the various funds.

Major proposed components of 2021 expenditures include:

  • $33,017,980 for the general and capital expenditure fund
  • $15,615,024 for streets and road improvements
  • $6,974,977 for recreation, $2,102,742 for stormwater
  • $3,199,769 for the police and road improvement use tax fund
  • $30,000 for police training, $889,219 for the sewer lateral insurance fund
  • $569,455 for the transient guest tax fund
  • $442,421 for the community development block grant fund
  • $45,200 for inmate security
  • $92,000 for the Justice Center facility fund, $265,616 for parks improvements
  • $4,292,484 for the debt service fund
  • $7,370,690 for water
  • $13,235,613 for sewage
  • $5,354,702 for the environmental services fund
  • $2,683,292 for the Renaud Spirit Center
  • $316,294 for the city’s public venue fund

The total proposed expenditures budget for the upcoming fiscal year is $96,497,478.

The personnel budget includes 451 positions at the beginning of 2021, with 12 more positions added during the fiscal year, for a total of 463.

“I think it is important for people to understand that is acceptable to spend down fund balances for planning large capital projects, and if it is a one-time capital expense that does not reduce fund balance lower than the city’s desired level,” Finance Director Vicki Boschert said.

Boschert further clarified, “Each of the funds (has) a certain balance that the city likes to maintain. Many have capital projects that span over several years and oftentimes the fund balance is accumulated in one year to be spent in subsequent years. This would result in the carryover of funds.

“There are times when we have project funds created through issuing bonds. Project funds typically span over several years as they are used to fund large capital projects. For example, this month we issued bonds for the water and sewer funds for improvements to the wells and the wastewater treatment plant. The proceeds increase revenue in 2020 but will not fully be expended until the end of 2021 or possibly the beginning of 2022.” 

Boschert also explained that it is difficult to compare the budget for one year to another year because of those capital items and the varying fund carryovers.

The capital improvement plan

A five-year CIP is required by the city charter, to be approved on or before the last day of the current fiscal year. The plan is used for planning purposes and does not constitute an approved budget. However, portions of it are used for the 2021 expenditures budget.

The new five-year CIP includes two new funds. The new Sewer Lateral Fund was used to bring the program in-house and was used to begin purchasing equipment during 2020. In addition, a CIP category was created for the new Police & Road Improvement Use Tax Fund to record capital purchases from the use tax receipts. The new use tax was previously approved by voters in June with 54.81% vote in favor of the proposition.

Those use tax receipts will help relieve pressure on the general fund, especially in future years.

The CIP for fiscal year 2021 includes:

  • $32,557,775 for the general fund
  • $15,615,024 for streets and road improvements
  • $6,974,977 for recreation
  • $2,102,742 for stormwater
  • $3,199,769 for the police and road improvements use tax
  • $889,219 for sewer lateral insurance
  • $7,370,690 for water
  • $13,235,613 for sewage
  • $5,354,702 for environmental services
  • $2,683,292 for the Renaud Spirit Center
  • $316,294 for the public venue fund

The total CIP fund breakdown for the upcoming fiscal year totals to $90,300,097.

Totals for upcoming fiscal years include $88,308,633 for 2022 and 2023, $90,654,895 for 2024, $90,308,930 for 2025, and $92,621,979 for the year 2026.

If typical processes and timing are followed, both the 2021 budget and the CIP bills will be given a second reading and vote for passage at the next council meeting on Dec. 10, which is the city’s last meeting in 2020.

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