December 5, 2022 - Here's why St. Louis County's budget cuts only address half its cash problem

December 5, 2022 | St. Louis Post-Dispatch (MO)

Author/Byline: Kelsey Landis St. Louis Post-Dispatch | Page: A1 | Section: News

CLAYTON — St. Louis County leaders have taken the first step in addressing their $41 million budget problem, but the most difficult task is yet to come.

Four County Council members proposed slashing three-quarters of the county's job vacancies — saving the county about $27 million in budgeted expenses next year. But the move would only address half of a fundamental imbalance between how much money the county spends and brings in.

"The red flag is that we are spending more than our base operating revenues each year, which will chew up whatever fund balance we have," county budget Director Paul Kreidler wrote in an email.

The county is temporarily flush with cash from federal COVID-19 stimulus and, soon, money from a settlement against the NFL and Rams. It can afford to spend in the red for a few years. But if the council doesn't cut another $14 million — or find the equivalent in revenues — it's going to burn through its reserves in the next few years.

In half of the past 14 years, the county has spent more than it brought into its $374 million general fund, which pays for most of the county's services. Without COVID relief money, the county would have overspent this year by $42 million, or 11% of the general fund's overall budget. The difference is expected to grow each year, reaching near $72 million in 2027.

The cuts proposed by the council's budget committee only allow departments to fill a quarter of their existing vacancies budgeted for 2023. It will limit their flexibility in hiring, County Executive Sam Page said, but force them to "look very closely at what positions they really need." Some of the positions had been vacant for years, and some departments couldn't find candidates to fill them anyway.

But the proposed cuts aren't enough, said Republican Councilman Ernie Trakas of unincorporated South County. He voted against all other budget proposals that have reached the council so far because they rely on spending from reserves, as Page suggested in his budget.

"I don't believe there's one item in the budget as proposed that I'm prepared to vote for without cuts," Trakas said.

Republican Councilman Tim Fitch said the measure represented "not completely kicking the can down the road" because the council has at least "taken action and cut the deficit by half." The cuts, proposed by the council's budget committee, still have to be approved by the full council and the county executive.

But the conversations on how to rectify the remaining $14 million deficit will have to begin after the new council is seated in January.

Council Chair Rita Heard Days has called on Page to commit to monthly meetings with council members to discuss possibilities. Fitch said the county executive has left the council in the lurch by not providing any ideas for reducing spending.

"The missing loop is the county executive," said Fitch, who didn't run for reelection and is one of Page's staunchest opponents. "He's the one who said to us, ‘Here's the budget I submitted. If you don't like it, figure out what to do with it.' There's no plan from him on how to try to balance this."

A spokesman for the county executive said approving a budget is the council's primary responsibility.

"We can use part of our reserve to bridge the budget gap in 2023 without disrupting county services like public safety and public health," spokesman Doug Moore said in a prepared statement. "We will work with the new 2023 council to better align revenues and expenses in future budgets."

HOW DID ST. LOUIS COUNTY’S DEFICIT HAPPEN?

St. Louis County's budget deficit didn't appear overnight. One of the factors that caused it stems back to the election of 1980.

Bob Priddy, a longtime Missouri political reporter, covered that election for the statewide radio network Missourinet, and he remembers the anti-tax mood that surrounded it.

Mel Hancock, a businessman from rural southwestern Missouri, took advantage of the mood. He led a successful ballot initiative that would restrict how much state and local governments could increase taxes in Missouri without a vote of the people. Voters approved it by 55%.

"The whole idea of the Hancock Amendment is based on a mistrust of government," Priddy said.

And it's one of the reasons St. Louis County's budget situation looks so dire, county officials say.

The amendment forces local governments to adjust their property tax rates to avoid excess revenues. When the county saw a sudden increase in assessed property values around 2007 and 2008, it couldn't collect the windfall, Kreidler said. Then sales taxes revenues also plummeted because of the Great Recession — about 10% of revenue from residents buying cars and shopping vanished.

"That was kind of the start of some of our troubles," Kreidler said.

Fiscal conservatives disagree. They say the Hancock Amendment is working as intended: forcing elected officials to reckon with limiting the government's size and expenses, Trakas said. Hancock didn't cause the county's budget problem, Trakas said. The county did.

"It's a spending problem" Trakas said. "I think government at every level overspends."

Still, cutting services can have painful consequences on public safety and basic services, said Democratic Councilwoman Lisa Clancy of Maplewood.

"These are services that people rely on every day," Clancy said. "Transportation and public works, trash collection, animal control, recycling."

The county doesn't have data on Hancock Amendment losses, Kreidler said, but the budget has teetered between black and red since the Great Recession. Property tax reductions mandated by the state have happened in four of the last seven years, according to Kreidler.

Years of pay freezes, tinkering with tax levies, drawing on reserves, and new revenue from the River City Casino in Lemay got the county to 2020. Federal COVID-19 pandemic relief and reserves has helped the county limp by since then.

But leaders need to decide on changes next year.

"We've got to deal strongly with what services we offer and what services our citizens are willing to pay for," Kreidler said.

IMPACT ON DEPARTMENTS

St. Louis County departments reacted with varying degrees of concern about the proposed cuts. Some said it will hamstring their ability to operate effectively, while others said they couldn't fill vacant positions anyway.

That's the case in the police department, where 101 vacancies could be cut. Fitch, a former county police chief, said "there is no way" the department would be able to fill all those vacancies within a year. The union that represents county police isn't as concerned about vacancies being cut as it is about recruitment.

"The conversation that should be taking place is, what are we doing to attract more folks to join the county police department?" said Joe Patterson, executive director of the St. Louis County Police Association.

The council also assured the police department and other departments related to public safety, such as the jail, that the council would likely approve additional requests, as outlined in this year's budget bill.

"If you fill those 25%, come back to the council, and I can't imagine anyone telling you no," Fitch said.

Still, other departments are sounding an alarm: The prosecuting attorney's office faces losing 15 vacant positions and money to buy three new vehicles. The office can deal with not buying new vehicles, Prosecuting Attorney Wesley Bell said in a prepared statement. But cutting the vacancies will hurt. The office has proposed new satellite offices and a special victims unit to focus on violent offenses, cold cases, auto theft and organized retail theft, Bell said.

"If these budget cuts go through with respect to staff positions, we will be back to overworked prosecutors and support staff with ridiculously high caseloads — and our specialized units will be jeopardized," Bell said. "Given the public's reasonable concerns with public safety, I don't think it's in the public interest to understaff the office responsible for prosecuting crime."