City Manager Mike Matthes painted a bleak picture of Columbia’s financial future during his annual budget message at the Daniel Boone City Building on Wednesday morning.
Matthes said the proposed budget for fiscal year 2019, which begins Oct. 1, is defined by a lack of revenue that inhibits the ability to fund projects and departments. The city is expected to lose an additional $931,000 in sales tax revenue in fiscal 2019.
The budget Matthes proposed projects total spending of about $453 million, which he said would be a 1.9 percent drop from this year, and revenue of about $432 million, which would be a 1.1 percent decrease.
City Manager Mike Matthes unveiled his proposed $453 million budget for fiscal 2019 on Friday. Here's the 696-page document, which will be the subject of several work sessions and public hearings. The new fiscal year begins Oct. 1.
The total general fund budget is $84.9 million. Columbia has been hit hard by declining sales tax revenue as consumers buy more untaxed goods online. The U.S. Supreme Court ruled in late June that states can decide whether to tax online sales, something Matthes believes would greatly benefit Columbia.
Although the general fund budget he presented is balanced, it won’t come without significant pain, Matthes said.
The city will be forced to continue the policy of waiting 45 days to replace employees who leave, Matthes said. He also is proposing cuts of more than $218,000 from city departments.
Matthes said that any future cuts after fiscal 2019 would require the city to reduce or eliminate some services.
Impact on workers
Matthes said he worries about morale among city workers. Some, including police officers and line workers, cite his budget philosophy as a reason for department staff shortages and have publicly complained.
In his address, Matthes proposed a 25 cent citywide pay increase for fiscal 2019. He also recommended adding the day after Thanksgiving as an official paid holiday for city staff. Even with that change, Columbia will still have fewer paid days off than the county and state provide.
Here is the PowerPoint presentation City Manager Mike Matthes used Friday morning when he offered details on the proposed budget for fiscal 2019.
“We’ve traditionally been pretty stingy about that particular benefit,” Matthes said.
A raise of about $10 a week probably won’t be enough to offset the 3.3 percent increase in health insurance costs Matthes is projecting, even though that cost will be shared between the city and employees.
Matthes said there’s nothing he can do about specific groups of employees who say their wages aren’t competitive.
“You’ve heard from line workers, you’ve heard from police officers, you’ve heard from many others. It is a problem,” Matthes said. Still, he said he doesn’t think he can simply raise those employees’ salaries and not others.
“It’s an issue of fairness,” he said. “We’re at the point where, quite frankly, every department is 30 percent under-staffed, and we’re getting to the point where we’re 30 percent under-paid.”
Community Relations Director Steven Sapp said its hard for the city to give a single department raises because all city departments are interconnected.
“We don’t work independently,” he said.
Impact on residents
The budget as proposed would cause utility customers’ monthly bills to rise. The average customer would see an increase of $2.93 a month, compared to $3.24 in the previous fiscal year. That includes a 25 percent increase in stormwater bills, 1 percent increases in water and sewer bills and a 2.5 percent increase in electric bills. If voters on Aug. 7 approve a $42.8 million water bond issue, they’ll see another 3 percent increase in water bills.
City Manager Mike Matthes delivered this budget message during a public presentation in the City Council chambers on Friday morning. Matthes said declining sales tax revenue continues to challenge the city and that any further cuts in future years would require eliminating services.
The budget also includes increases in food inspection fees and some parks and recreation fees.
One service that will undergo significant changes in the coming year is the bus system. Matthes proposed ending service at 7 p.m. rather than 8 p.m. during the week and on Saturdays. He also would increase paratransit fees by $1 per ride and end special event service, which would mean no bus transportation to and from the Roots N Blues N BBQ Festival, the True False Film Fest and MU football games.
Matthes says the city will have to stop relying so heavily on sales tax revenue because it is no longer sustainable. One possible way the city can move away from its reliance on sales tax is by increasing property taxes.
“We can’t look for help from the property tax right now because it is so small,” Matthes said.
Columbia’s property tax levy is 41 cents, one of the lowest in Missouri. Matthes has proposed increasing the property tax ceiling to 43.29 cents, the maximum allowed. The Columbia City Council can still set the rate below the ceiling, but Matthes says raising the ceiling allows the city to take advantage of money on the table.
The proposed ceiling is the highest the city can raise the property tax without putting it on a ballot for public vote. Columbia’s property tax has not changed since 2002. Voters in 2014 rejected a 30-cent property tax increase that would have paid for more police and firefighters.
Matthes also worries about the impact of U.S. steel tariffs imposed by President Donald Trump. He said the city had previously planned to build a new police station in north Columbia using steel.
“If the tariff kicks in we may not be able to build it,” Matthes said. The building would probably need to be redesigned as a wooden structure.
“We’re going to finish this process and see what happens,” he said. “Right now, we are chewing our nails about that tariff.”
The city has almost $1.5 million in savings from fiscal 2017. Matthes said some ideas for how to use that money include building a new fire station, paying for a proposed citywide audit, buying nine to 12 new vehicles for the police take-home car program or investing in the Dignity in Work and Peer to Peer Naloxone programs.
Here's a brief summary of the proposed city budget for fiscal 2019 that City Manager Mike Matthes presented on Friday. It projects average monthly utility bills will rise by $2.93.
Public safety was a large focus of Matthes’ budget message. He said that two of every three dollars in the general fund goes to public safety. The remaining $1 is used to fund all the other 16 city departments.
Matthes emphasized the success of the city’s community policing program. The neighborhoods selected as “strategic neighborhoods” by the city have seen a 22 percent reduction in the most tracked crime categories, Matthes said. He has appointed police Sgt. Robert Fox to work with him on a citywide community policing plan that will be presented to the City Council on Aug. 31.
While the future of Columbia’s budget looks bleak, Matthes remained hopeful that the city can pivot away from relying on sales tax. He believes a property tax increase or collecting online sales tax are the best options. He plans to work with the Missouri Municipal League to lobby the state legislature to pass a tax on online retail, something be believes could eventually bring in around $10 million per year in revenue.
“That money would solve all of our problems,” Matthes said.