The week has come and gone. That means that the city council’s first look at the 2015 budget has also come and gone. On Tuesday, the council met for the first of our planned annual budget meetings. So far, so good.
The good news is the city budget presented to the council maintains the level of service that Neosho was able to provide in 2014. We are, however, planning less investment in capital items such as police car replacements and we’re not spending as much on road repairs as we did in 2014. For our employees, we are planning for a 2 percent cost of living adjustment for the entire employee base.
But this year’s budget isn’t coming together without its challenges. The city manager is dealing with a number of things that make the budgeting process a challenge. One of them is the unknown outcome of possible veto overrides on bills that could cut sales tax revenues to communities across Missouri. The latest information we have estimates the potential cuts for Neosho to be around 6 percent of total sales tax collections (that’s about $130k for the General Fund alone!) Unfortunately, any veto override attempt won’t happen until September. By then, our budget should be put to bed and under final review for passage by the council. Because of that, we’re being very conservative on revenues – after all it’s much easier to adjust revenues up and add projects than it is to make cuts at the last minute.
Other excise/franchise tax reductions will also happen in 2015 due to some recent court rulings. Neosho’s impact on those tax losses is estimated around $160,000.
Also, we still have to discuss property tax rates for FY2015. The hearing and vote on property tax rates hasn’t happened yet by the council. That vote is expected next week (and must happen by the end of August). The council last year dropped the property tax rates as the city’s financial recovery progressed. This year’s decision will be complicated by the potential revenue losses mentioned above and the fact that we have to vote on our annual property tax levy BEFORE we know the outcome on possible veto overrides. It’s never a dull moment!
The council will also have to estimate how much money we should add for recently filed lawsuits against the city and the related legal bills that could come from those suits. As of now, I don’t have any estimates on what those lawsuits will cost. We expect an update on possible costs as early as next week.
Overall, your city is in a good financial position. The reserves we’ve been building for the past few years will do their job in FY2015. FY2015 will also be the last year to repay the illegal borrowings from the Blase administration. (That’s roughly a $275k bill that the city will no longer have to deal with after the upcoming fiscal year.) And the city’s refinancing of current debt continues to reduce the amount of money we will be paying in interest. We continue to make progress!
I’ll have more budget updates for you in early September. As always, if you have any comments or questions, please don’t hesitate to call or email me or your other council members or your city manager. I always welcome your input.
I had a great couple of days in Sedalia. I happened to run into my good friend Bill Reiboldt and his wife. I also spoke briefly with the governor about the tax vetoes. If you’ve never been to the state fair, you’re missing out!
Until next time: stay the course, keep the faith, and may God bless Neosho.
Richard Davidson is mayor of Neosho.