ST. LOUIS — City officials, projecting an eight-digit budget deficit, have frozen hiring, may reduce promised pay increases, and are even considering furloughs or layoffs, if necessary, as they work to prepare next year’s budget.
“Nobody knows where we’re going to wind up,†said Todd Waelterman, the city’s operations director. “It’s a wide window. It’s hard to plan for.â€
The city’s budget department is expected to present a proposal to top city officials on Wednesday.
Things had been looking up for ºüÀêÊÓƵ in recent years. Earnings taxes had been growing as incomes rose. Budgets were strong enough to allow the city to stash away cash and grow its reserves. A surplus had been projected for the current fiscal year, Waelterman said.
Now, city budget officials are expecting a deficit. Citing an analysis from Budget Director Paul Payne, Mayor Lyda Krewson in a letter at the beginning of the month said a deficit for the fiscal year ending June 30 could range between $55 million and $63 million. This year, the city’s annual fiscal blueprint totaled about $1.15 billion.
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Payne said he will present next year’s projections Wednesday to the Board of Estimate and Apportionment, the city’s top fiscal body, made up of the mayor, comptroller and the president of the Board of Aldermen.
“There’s nothing set in stone,†Payne said.
Bill, if enacted, would increase the annual merit raise for civil service workers to 3% from the current 1.5% for fiscal years 2021 and 2022. Some full-time workers also would receive a one-time, $1,000 bonus.
ºüÀêÊÓƵ aldermen need to pass a spending plan before the start of the next fiscal year on July 1.
Less than two months ago, the Board of Aldermen passed a bill promising 3% raises for city employees outside of the police and fire departments, which are covered by their own labor contracts. The bill also promised $1,000 bonuses. Those were paid Friday to city employees, many of whom are performing essential services and interacting with the public.
Krewson’s chief of staff, Steve Conway, said Friday that the 3% raises may be scaled back to the 1.5% raises that have been allotted in recent years. Other municipalities in the region, more reliant than ºüÀêÊÓƵ on hard-hit sales tax, have cut staff to shore up finances. While Conway said layoffs and furloughs aren’t currently in the draft budget documents, “depending on the continuous review of our revenue streams, that may become a possibility.â€
Raises for police and firefighters beyond what is already in their salary schedules are also on hold because the city was still in negotiations with police and fire unions on new contracts.
“We had some early talks, one or two meetings, and then the virus kicked in and we kind of put it on the back burner,†Waelterman said of police and fire contract negotiations, which he helps lead for the city. “There hasn’t been any real movement either way on that.â€
He said the city will talk with the unions representing other employees about rolling back the raises to 1.5% — “if there’s enough to scratch together for that.â€
“The alternative is get rid of 5 or 10% of the employees,†Waelterman said. “It’s something we’ve all got to band together with and get through this. Hopefully they respect the $1,000 they got and what’s going on here and power it through.â€
Conway said Krewson has instituted a hiring freeze, though key departments such as the health department, the police department and the fire department can fill positions in response to the pandemic. About 750 positions are vacant across the city, he said.
Missouri and its local governments are especially exposed to this crisis. Unlike 48 other states, Missouri’s GOP-dominated legislature has not passed a bill to allow the collection of online sales tax.
The state may reimburse ºüÀêÊÓƵ for money spent to combat COVID-19. The state Legislature passed a $6 billion emergency spending package last week to distribute federal money. Conway said Krewson’s administration spoke to Gov. Mike Parson’s office Friday morning. Conway expects some money to reimburse the health response to begin arriving soon.
ºüÀêÊÓƵ' unique position as a city and a county, and its population, mean that it will receive no direct federal aid.
Less clear is federal aid to local governments that replaces plunging tax revenue. Congressional Democrats are pushing for such aid to be added to a package that Republicans would rather keep focused on replenishing a $350 billion emergency small business lending program, leading to a stalemate in Washington.
“We don’t know where the feds are,†Waelterman said. “They have yet to come up with anything that replaces lost revenue. I hear it’s coming, but I don’t believe it until I see the check.â€