COLUMBIA - The city manager proposed a budget Friday morning that include cuts due do to low sales tax growth.
Mike Matthes, the Columbia city manager, started off the meeting with saying low sales tax growth is causing many of the budget cuts for 2018.
“We aren’t getting as much sales tax like we usually do,” Matthes said.
He said this year will be a “historically low sales tax growth" predicted at a one percent growth, while in past years the sales tax growth has been at nearly five percent.
“Over time we buy something online, we defund the city government,” Matthes said.
He recommended the city conduct a study of the retail economy in Columbia. The study would answer questions such as:
- What products do shoppers leave Columbia to buy?
- What parts of the retail industry compete well with the internet?
- What could commercial landlords do with the information found in the study?
“Maybe if we knew that answer, we could share that with other people,” Matthes said.
Some of the other challenges Matthes mentioned were the rising health care costs, increasing pension costs and transit costs. He said out of the $1.3 million increase in pension costs this year, one million is in police and fire pensions.
Matthes provided techniques on how to balance the general fund budget. Last year the city council put off replacing the fleet, and he is suggesting the council do the same this year.
“We are going to push our fleet, yet again, one more year,” Matthes said. "This is maybe the last time we are going to be able to do that. They are machines.”
For the second year in a row, he also suggested continuing the 45-day pause. This means the human resources department will hold off on hiring someone for 45 days after the request has been sent in. The city manager said this may mean a department may have to decide to do less, or pick up more work.
“It’s a painful technique, however it causes less harm than other budget cutting techniques,” he said.
Matthes also suggested the Information Technology, Community Relations and the Building Maintenance/Custodial office cut $1.1 million all together. He said this money will help pay for the fire and police pension funds.
Matthes looked at transitioning four police officer positions into civilian positions, and then putting those four police officers on the streets. He wants to civilianize police department jobs that don’t require police powers. Matthes said these civilian positions cost about one half of the cost of adding police officers.
“We can add a job at half a cost and move a sworn officer back to a job that requires police powers,” Matthes said.
Bryana Larimer said Columbia Police Department’s command staff has been participating in meetings with Matthes.
“This was a cooperative effort to try to get more officers on the street,” Larimer said.
Ward 2 Council member Michael Trapp said he was surprised to see funding for additional police officers.
“Finding ways to be more efficient by freeing up officers to do patrol work. That’s good management,” Trapp said.
Matthes mentioned adding these four officers to the streets wouldn’t fill the police officer void the department currently has.
Matthes also outlined what he said is good news for Columbia. He said Columbia has bond ratings steady at AA. Bond ratings are an external indicator of the financial health of utilities and the faith the market has in financial stewardship. However, he doesn’t think this will last for long.
“I don’t know how much longer we can see that,” Matthes said. “Municipal bonds are becoming less and less attractive in the marketplace.”
Matthes suggested several tax initiatives including a putting use tax and property tax ballot. He said the use tax fills the gap where people try and avoid a sales tax. He said those building in Columbia will buy lumber from China and avoid the sales tax here. He said the use tax would prevent people from avoiding the tax.
“You can’t avoid the sales tax. Either pay the sales tax or pay the use tax,” he said.
In a letter from Matthes to the city council, he said there won’t be additional funds for streets and sidewalks. The streets and sidewalks budget was reduced by $351,000 last year for additional police officers, and additional funding for roads is not possible.
“Our citizen survey indicates that the public would like more investment in roads. However, given the condition of the retail economy, increased funding is highly unlikely,” Matthes said.
Matthes wants to take out three routes from the public transit system. He said transit continues the exceed revenues and must reduce spending by $575,000. He said currently it costs $38 each ride, and the city only charges $2. Matthes suggested raising this cost to $3.
“There’s no other fund that can bail out transit at this point,” he said.
The report said the city will also be rebranding the bus system. It will now be called, “GoCOMO”. He said they will begin changing signs and software immediately.
The city still has $4.4 million in savings from 2016. Matthes outlined several ideas to use the money in his report. He wanted some of the funds to go towards strategic plan implementations, starting phase two of expanding the Missouri Innovation Center and providing grants to taxi providers to purchase accessible vehicles.
Trapp said he doesn’t have any plans to make any budget amendments at this point.
“It’s a tough budget year,” Matthes. "For what he had to work with I think it’s an impressive budget."
Matthes said the public has several opportunities to express its opinion about the proposed budget.
- Public hearing: Monday, August 21
- Council work session on the budget: Wednesday, August 23
- Public hearing: Tuesday, September 5
- Public hearing and adoption of the budget: Monday, September 18