The city of Springfield will have a surplus in its budget for the first time in eight years, thanks to a recently approved income tax increase, local leaders said.
It also plans to use that extra revenue to hire seven new police officers, repave several neighborhood streets and fill some scaled-back positions, such as a code enforcement officer. It will also give raises, the first time in several years for some workers.
Springfield is expected to collect about $43.1 million in general fund revenue next year, including $33.9 million in income taxes. The city is projected to spend about $42.6 million, leaving a projected surplus of about $520,000 next year.
Springfield voters recently approved a income tax increase that will generate about $6.7 million annually.
The city projected in 2015 that it was likely to run out of money midway through 2018 if new revenue wasn’t generated, Springfield Finance Director Mark Beckdahl said. The increased revenue will keep Springfield from entering fiscal emergency, he said.
“It’s all thanks to the the community’s support of our tax issue,” City Manager Jim Bodenmiller said. “But for the citizens being supportive of us, we’d still be in dire straits. By no means are we a wealthy community. We still have lots of challenges.”
The city is also projected to have a surplus of about $1.3 million at the end of this year — a year after projecting a deficit of nearly $850,000.
Springfield is expected to spend about $28.4 million on personnel next year, the largest expenditure in its general fund. The city is also expected to spend about $5.6 million on medical insurance, a 12 percent increase from the previous year.
The budget includes raises for employees, Bodenmiller said. It’s currently in negotiations with five of its six unions, he said.
The city recently gave raises to its AFSCME units, including 3 percent raises this year and a 2 percent increase next year. Those employees also agreed to pay an increased share of health-care costs, Bodenmiller said.
Some employees have gone eight years with virtually no increase, Bodenmiller said, which the recent performance audit said isn’t sustainable.
“It’s part of the reason we’ve been losing people,” he said. “Pay has been an issue for us.”
The city plans to hire 11 new positions as part of the preliminary budget, including seven new police officers to kick-start the Safe Streets Task Force.
“We’re actually able to invest back into the community now as opposed to cutting services and laying people off,” Bodenmiller said.
Other positions to be hired include several that were recently scaled back, such as a payroll officer, an income tax account clerk, a code enforcement officer and a communications officer.
The city will spend about $5.4 million to make capital improvements, including $2 million for neighborhood streets pledged as part of the income tax increase, Bodenmiller said. Portions of several neighborhood streets were paved this year, including East Street, Balsam Drive and Miracle Mile.
“($2 million) won’t pave every street in Springfield, but it’s a start,” he said.
At the end of last year, the city was projected to have rainy day reserves of about $1.39 million, or about 3.5 percent of its overall budget. With the increased income tax, the rainy day fund is projected to be about $4.2 million at the end of 2018, which is nearly 10 percent of the budget.
The commission’s goal is to have about 10 percent set aside but a recent performance audit said the city’s rainy day fund should sit at about 16 to 17 percent, Bodenmiller said.
Income tax makes up about 79 percent of the city’s general fund. A decade ago, that number was at about 69 percent, Beckdahl said. The city must have reserves in case the economy faces another recession, he said.
“We’re becoming so reliant on income tax,” he said. “It’s such a big piece of it that it makes us subject to changes in the economy. It affects us more than it has in the past.”
The city built back up its reserves in 2010, but that’s when the state began to cut local government funds, Bodenmiller said. Springfield collected about $3.5 million in both local government funds and estate taxes in 2010. The projected budget shows the city will collect about $1.63 million in local government funds next year. The estate tax has since been phased out by state officials.
“It’s those cuts which continue to this day that are whacking our local revenue,” Bodenmiller said.
A public hearing and first reading of the budget will be held at 7 p.m. Tuesday, Nov. 21, at the City Hall Forum, 76 E. High St. Springfield commissioners will vote on the budget on Dec. 5.
2017 BUDGET TIMELINE
Staying with the story
The Springfield News-Sun has written extensively about the city’s budget issues and the recent income tax increase, including stories digging into a performance audit and its plan for how to spend the tax increase.
By the numbers
$43.1 million: Springfield’s projected revenue in 2018.
$42.6 million: Springfield’s projected expenditures in 2018.
$520,000: Projected surplus at the end of next year.