Shrewsbury Approves Budget Shortfall for 2012

For the third year in a row, the Shrewsbury Board of Aldermen has approved a budget with a six-figure deficit.

The approximately $5.5 million 2012 budget passed by the aldermen at their meeting Tuesday night projects an overall deficit of $263,298. Budgets in 2011 and 2010 predicted shortfalls of $177,201 and $176,800, respectively. A public hearing on the budget was held prior to the meeting, but no citizens stepped forward for comment. Director of Administration Jonathan Greever said Shrewsbury plans to post the full budget on its website.

Mayor Felicity Buckley said the shortfall occurred despite two significant cuts—no cost-of-living wage increases for city employees and the elimination of the salary for a city administrator.

“These are not sustainable cuts,” Buckley said.

The mayor also used time at the end of the meeting to talk about the city’s budgeting process and directly address those who have opposed the city’s approach, particular its pursuit of the Kenrick Plaza redevelopment.

“Without a significant injection of revenue into our general fund, we are going to be faced with serious service cuts and/or increased taxes,” she said. “I’m repeating this at this time because that message has been met with challenge throughout the community, for understandable reasons.”

New faces, same problems

Buckley said this year brought “fresh eyes” to Shrewsbury’s balance sheets, but no one has been able to put forward a series of cuts that could maintain the city’s services while eliminating its deficit.

“It’s something we can’t do,” she said. “It’s not a matter of us tightening our belts, or that we didn’t do our homework, or that we are not giving good, clear, honest information.”

However, Buckley also said the “message coming out of city hall” was not meant to persuade anyone about their opinion on bringing a Walmart Supercenter to Shrewsbury, but rather an effort to accurately represent the city’s financial condition. Still, despite stalled negotiations with developer J.G. Grewe, she noted that a majority of the board is committed to seeing the development through.

“We are a 'point-of-sale' city, and it’s important to remember that that is what allowed us to afford our amenities and our services,” she said. “What’s changed in this community is a decrease in retail sales tax.”

Crunching the numbers

According to budget documents available on the city’s website, general fund tax revenues rose briefly in 2008 to $3,848,488 from $3,763,662 in 2007, but have since fallen and remained around the $3.7 million mark in subsequent years. For 2012, the city is predicting it will bring in the same amount of overall revenue as last year, around $5.6 million, compared to approximately $5.8 million in 2008.

A closer analysis of the city’s 11 sources of tax revenue shows that while sales tax receipts fell $106,000 from 2008 to 2011, an even larger drop occurred in telephone utility taxes, which declined $125,000 in the same period. However, these and other losses were blunted by some areas where tax revenue has actually been increasing, such as real estate taxes (up $105,000) and Ameren UE utility taxes ($86,000).

These examples have shown some of the most movement in recent years but are only part of the picture for Shrewsbury. When income from permits, fees, grants, parks programs and miscenallenous source are included, the city's total revenue fell approximately $171,000 from $5,819,667 in 2008 to $5,648,553 in 2011. 

Also factoring into the city's financial situation are its capital improvements, which accounting regulations stipulate must be in a separate fund. Revenue and expenses in this category can be volatile, since there may be grant funding to do a major project one year and not the next. However, it also draws money from sales tax and has seen that income decline by roughly $50,000 from 2008 to 2011. 

The complexity inherent in sorting through these various streams of income and expense is part of the challenge Shrewsbury and others face in closing budget gaps.