October 1, 2022 - ‘This cannot continue much longer': St. Louis County faces growing budget deficit

October 1, 2022 | St. Louis Post-Dispatch (MO)

Author/Byline: Kelsey Landis St. Louis Post-Dispatch. | Page: A5 | Section: News

CLAYTON — St. Louis County residents will receive the same services from their county government next year without a tax hike if leaders approve a proposed budget released Friday.

But the status quo won't work for much longer without either making cuts or increasing taxes, budget officials say.

County Executive Sam Page's office recommended a $1 billion budget for fiscal year 2023, which begins Jan. 1. Page warned County Council members of a stark $30 million spending deficit and dwindling reserves as supply chain issues and inflation drive the cost of services higher. It will cost the county $64 million more in 2023 to provide the same services — a nearly 7% increase from 2022.

"Our revenue structure does not provide the funding necessary to support these services," Page wrote in a letter to the council. "We are forced to rely upon reserves to bridge this gap, but this cannot continue much longer."

There are ways to cover the deficit, but beyond next year, it becomes increasingly difficult. The county already relied on federal pandemic relief money this year to offset revenue losses and avoid job cuts.

The county executive proposed drawing on reserves to cover the deficit in 2023. The council could also decide to cover part of it using one-time windfalls from more pandemic relief money and settlements from an opioid lawsuit and a suit against the NFL. They could also sell property. But those solutions are still uncertain, and none provide a permanent fix, said Paul Kreidler, director of performance management and budget for the county.

"When the one-time federal COVID funds injected into our financial plan in 2021 to keep us afloat for a few years are exhausted, we will be forced to reduce service levels or seek additional revenue," Page wrote. "Our reserves are a finite resource that cannot be used indefinitely to balance the budget."

The council will have to decide if they "have a revenue problem or an expense problem," Kreidler said.

"If it's a revenue problem, then you don't have enough money to support the services you say are important. So where do you get that revenue from?" Kreidler said. "If you think we've got an expense problem, then you've got to right-size your spending to fit your revenues. Then you've got to eliminate $30 million just to balance yourself."

"Then they've got to get to the point where they say, ‘OK, this is my service that's more important than that.' And then just cut them," Kreidler said. "At some point, the citizens will either be OK with it or they won't be and then they'll have to react to that."

The county attempted to solve some of its budget woes earlier this year by proposing a sales tax on internet purchases from out-of-state vendors much like shoppers pay at local stores. Voters rejected that proposal in April.

Here's a look at a few provisions included in the proposed 2023 budget:

• A $41.5 million increase, or 5.8%, to the operating budget, the budget that outlines spending for most of the county's operations.

• $3.7 million to give up to 4% raises to non-union employees.

• A $7.5 million increase to the police department's budget for pay raises and other benefits.

• A $6.7 increase to the Department of Public Health.

• More than $939,400 for hiring 16 new jail corrections officers.

• $45 million for road construction and public works projects, a decrease of roughly 1%.

• $206.4 million for mass transit, a 12.5% increase.

After a public hearing where Kreidler will discuss the proposed budget and financial problems facing the county, the council will schedule committee hearings before making changes to the budget and giving it final approval. If the council fails to adopt a budget by the end of the year, the county will automatically appropriate 1/12th of this year's budget every month until they approve a new one.