Budget decisions were finalized Monday with the passage of the 2020-21 city budget by the Mexico City Council.

The budget approval was the final step in months of work, which included setting the next year’s tax levy and other decisions that could affect residential payments to the city.

“At the forefront of any decision made is how to fund our core and essential city services first as well as the needs of the citizens in the most effective and efficient manner possible,” Mexico City Manager Bruce Slagle said.

Fund balance reserves were maintained and the budget will use fund balance surpluses from previous years to help pay for non-recurring expenses and other capital projects, he said.

City staff also continue to pursue other funding avenues, such as grants, for capital projects, he said.

“Unnecessary expenses have been removed, personnel costs have been controlled and program efficiencies have been implemented,” Slagle said. “This budget is balanced and the city is operating in a lean and condensed state.”

Total expenditures for next year are estimated at just over $18 million, while revenue estimates are $16.4 million, an overage of $1.6 million.

The extra expenses are covered by project reserves, budget surplus from previous years and a bank loan, according to council packet information.

The expenditure excess is due to some fund transfers, planned equipment purchases, planned capital improvement projects and some carry-over improvement projects, Slagle said.

Other budget impacts include a reduction in property values from the previous year, lodging tax receipt reductions and gross receipts tax reductions. Sales tax revenue has increased slightly, however. Proposition B, which increases minimum wage 85-cents per year until 2023 when it reaches $12 also affected the city’s budget for seasonal workers.

The city will receive less in the next year from the state’s gas tax and car sales tax due to the decline in revenue from decreased traffic volumes associated with COVID-19, Slagle said. The Missouri Department of Transportation distributes a portion of those tax funds to cities and counties to help fund maintenance and repair of local roads.

Stay-at-home orders have meant there increasingly were more people shopping online, Slagle said. Mexico voters approved a local use tax in June to be able to collect tax on out-of-state purchases, typically through online sales. Annual revenue is estimated at $152,000 from the use tax, which already is collected at the state level, but could not be distributed to the city without a use tax approval by Mexico voters.

“Retailers will begin collecting the use tax in October and the first remittance of the tax will be in December,” Slagle said.

The city’s insurance costs are increasing. Property and Liability insurance rates are estimate to increase 15%. Health insurance for employees also is expected to increase 15% and dental by 10%. City staff will receive a 1% cost-of-living adjustment to their income. There are no step raises for the next year. Full-time staffing levels remain steady, Slagle said.

The city provides financial assistance to a number of charitable and contract agencies. Support levels remain steady from previous years even if the agency requested more money for the next year. The only exception was Handi-Shop Inc., which received a reduction in what it receives from the city due to Handi-Shop reducing its recycling services, Slagle said.

The city has received grants from MoDOT the federal department of transportation, coronavirus relief bill funding, and more for capital improvement projects next year, such as the Muldrow Street Sidewalk project.

Private donations have come to the city in support of a park signage project and a trail grant match for parks.

The city also received a $2.5 million bank loan to help pay for the Fairground Pool upgrades. This will be repaid through the use tax collections.

The city breaks down its budget by fund for accountability. Funds included in the budget, with separate revenue and expenditure reporting, include the general fund, wastewater operation, sanitation operation, economic development, parks and recreation, public health and animal control, airport and capital improvement sales tax.

The general fund includes most city departments, including public safety, administration, community development and public works, among others.

The budget planning process has allowed to city to not increase its customer sewer bills for the next year, Slagle said. The city does expect a rate increase of 2.81% in April for trash collection, he said. This is due to increased landfill rates.

IN OTHER BUSINESS

The city’s pretreatment coordinator Dustin Johnson for the wasterwater treatment plant is a member of the U.S. Army Reserve and recently received his orders for a 12-month deployment. The city’s public works department sought to have a contract approved with Kim Hoskins Environmental Consulting LLC for pretreatment program assistance for the next year. KimHEC would serve as an on-call consultant to help with writing permits, and reviewing and updating the city’s pretreatment ordinances to comply with updated regulations. The council approved the contract, which will not exceed $21,600 and is part of of the 2020-21 budget allowing up to $72,500 for professional services.

The city approved a bid package from The Daniel and Henry Company for a property and liability insurance of $217,781. City staff had estimated a cost of $228,801 for liability insurance. While the city did receive a lower bid from the local First State Insurance Agency, it did not offer the same level of coverage as the bid from Daniel and Henry. There are further liability insurance purchases planned, such as at the airport and a city-owned property on Lakeview.