City passes 2016 budget
Issues raised over transportation tax spending, water-sewer rate
The city of Cassville passed its 2016 budget on Dec. 14, with three aldermen voting in favor of the financial ordinance, and one alderman voting against it.
Terry Heinz, who cast the lone nay vote, said he did so out of concern over the way transportation tax dollars are being used, and over the proposed water and sewer rate hike not being high enough to build larger reserves for upcoming projects.
Heinz said not enough of the transportation tax revenues will be spent directly on fixing the city's streets, which is cause for concern since he asked residents to pass the tax in 2014.
"When we asked the people to approve the tax, I told the citizens we would have great streets because we'll collect $300,000 to $400,000 a year, and that will go a long ways to improve the streets," he said. "I might have also been a little naive, because I hadn't looked into the cost of street improvements, and when we're talking about 72 miles of streets, $300,000 to $400,000 a year does not go very far."
Heinz said before the transportation tax was passed, the streets department was funded solely through County Aid Road Trust (CART) money, as well as transfers from the general fund. Now, Heinz said the general fund dollars are slated to stay in that account, and two-thirds of the transportation tax money will be spent on general expenses, rather than going directly to streets.
According to budget figures obtained from City Clerk Jennifer Evans, the streets department in 2016 is expected to bring in $542,132 in total revenue, including $441,532 in taxes and fees (with the transportation tax revenue accounting for $319,532), as well as $100,000 being held over from 2014 and $600 carry over in street cut fees.
Of that total figure, $230,000 is budgeted for chip and seal projects, $116,810 is budgeted for salaries and benefits, $97,000 is budgeted for equipment and $82,024 is budgeted for general operating expenses, all totaling $525,834. Another $16,297 is budgeted for the Walmart Developer's Agreement, and the 2014 COP debt service. Once that money is added in, along with various cents from unrounded numbers, every dollar 2016's expected revenue is set to be spent, down to the penny.
Alderman Jon Horner said overall, he believes the budget for 2016 is strong and uses taxpayer dollars wisely.
"I think 2016 will be the first year we can do improvements to a lot of streets from money raised with the sales tax," he said. "We have a 7-year plan, so we aim to do one-seventh of the city's streets each year, then be on a 7-year cycle for repaving."
Heinz said the transportation tax money being used on streets is not enough, as chip and seal projects would only be $130,000 instead of $230,000 if not for the $100,000 in holdover funds from 2014.
"The rest of the money from that $319,000 [from the sales tax] is being used for other expenses," he said. "In 2014, salaries were $65,439, and we have $116,810 budgeted for 2016. Also in 2014, operating expenses were $60,351, and in the 2016 budget, it's $82,024.
Salaries were really escalated, and I didn't ask for an explanation, but I believe we are decimating the transportation tax money when I thought it would be used for other things. I would like to have funded the streets department with CART and general fund money for another 5-6 years, and use the transportation tax money only for streets."
Bill Shiveley, Cassville mayor, said the $51,371 hike in salaries in the budget is in place for the city to, in the future, hire two new employees to do the chip and seal work.
"That was on [Terry's] recommendation," he said. "They may only be part-time employees.
Shiveley said how he sees it, $230,000 of the $319,532 in transportation tax money is going to streets, and general fund money previously used to supplement the department is needed for other city expenses.
"We were losing opportunities to do other things with the general fund money," he said. "We were short-cutting law enforcement and other areas because we had to transfer that money to streets."
Horner said he understands Heinz's desire to put more money toward street repairs immediately, but said the $230,000 budgeted for 2016 is good enough to start the 7-year plan.
"Terry also objected to the equipment purchase, but it was needed to maintain the streets," he said. "Equipment was a large item, and I'm not in favor of spending that money on equipment every year, but see it as a catch-up item."
Of the $97,000 in equipment expenditures for 2016, $17,000 is slated for two snow spreader stainless steel boxes, used to spread salt in sever weather, and $80,000 is going toward a Tiger Tail, which Shiveley said is a tractor with a sidearm used for mowing the city's right-of-way and completing other street maintenance.
Heinz said he's worried the city will take too long to fix the streets, as Hutchens Construction estimated $23,466 per mile to chip and seal.
"That's just basic first aid," he said. "At $130,000 per year, before we get it all done we'll have to start over because chip and seal life is only 5-7 years."
Horner said he hopes to stick with the 7-year plan, which according to Hutchens, would require $250,000 to $280,000 per year, and he said the $230,000 for this year is a good starting point.
Shiveley said the city aims to do 10-12 miles of streets per year, and some streets may take more than just chip and seal, but said the city is in good shape to keep plugging along.
"Chip and seal is a middle-of-the road approach to preserve what we have that's in decent shape," he said. "Places like Gravel Street behind [Mercy Hospital] need to be totally fixed."
A second issue drawing attention in the budget is the proposed 3 percent water and sewer rate hike, which Heinz said is not high enough for the city to begin to put money in reserves and prepare for upcoming projects.
"We had a meeting and whoever made the budget had it set at a 2 percent increase, and I brought up that increase was too low," he said. "The mayor asked us to email the clerk with what we thought the increase should be, between 2-5 percent, and it ended up at 3 percent."
Heinz said he would have gone with 5 percent, as he said the city needs to begin preparing for the possible $10 million in water and sewer line projects coming down the pipe, which would aim to tackle the city's inflow and infiltration issues due to old pipes, which is overflowing the city's wastewater lagoon at times and could lead to fines from releasing untreated effluent.
"To pay for those, we're going to need a loan from the USDA, State Revolving fund money or bonds, or a combination of all three," he said. "We have to have a revenue source to pay all that back, and we have to fund that from fees, not the general fund.
I'm looking to the future and saying we should have started these increases a few years ago with slow, incremental increases each year. We are not doing the right thing for the city and ignoring the problem by not having the political guts to raise rates where they need to be."
Horner said the 3 percent is a start, and he hopes to see increases annually to stay on top of inflation.
"It's not enough to do any major projects, but I also acknowledge there's no way for citizens to absorb a larger hike at this time," he said. "If we continue to do incremental rate increases, we should be in good shape in about seven years."
Shiveley said 3 percent is probably not enough, but the city is not in a position to bond for $10 million, or even $5 million, at this time.
"We're just trying to get the rates up to the percentage we'll need to go out for grants, and to do a rate study, which we're pushing to late 2016 or early 2017," he said. "Say we are 10 percent below [what's needed for grants], we don't want to do that all at once.
"I know where Terry's at and we have a responsibility to the city, but we can't bond at this time anyway, so let's treat people as safe as we can and do it over a period of time."
Shiveley said the city has about $30,000 in water and sewer department reserves, and barring any unexpected expenditures, should add another $15,000 after 2016.
"At 2-3 percent, we can pat ourselves on the back, but we are doing a disservice to the citizens, because if we need money for projects, we would have to do it all at once," Heinz said. "I recommended 5 percent to build up for future projects, and we should have been doing these increases in the past 5-6 years. Every time we have raised rates in the past 5-6 years, none has been set aside for improvements because of costs and inflation going up."
Horner said he's hoping the city will qualify for other funding for the upcoming projects,
"Prior to 2011, we had 10-15 years of no increases, and this plan is to gradually increase each year to make improvements," he said. "We hope to get other funding assistance without having to do a huge sewer and water increase."