The Joplin Globe, Joplin, MO

Local News

August 4, 2013

Neosho City Council faces budget decisions

NEOSHO, Mo. — As the Neosho City Council begins work to prepare the 2014 city budget, it must consider debt payments and loss of a Fire Department grant.

No raises for city employees are included in the draft budget.

The city has fund balances of $7.4 million, which city officials said would be needed in the coming year. The city’s fiscal year starts Oct. 1.

The council will meet every Tuesday this month with a goal of having the budget completed by the end of the month. The council has met once already to review the draft budget prepared by City Manager Troy Royer and Finance Director Daphne Pevahouse.

Royer said by phone last week that principal payments on the debt incurred before the 2009-10 city financial crisis are coming due.

“A lot of those were front-loaded with interest payments for a number of years,” Royer said. “Then the principal payments started kicking in.”

Royer said that when possible, the city has refinanced the debt without extending the term of the repayments.

“We’ll continue to do that as part of restructuring the debt,” he said.

FOCUS ON DEBT

The city’s total debt is $28 million, said Mayor Richard Davidson. About $15 million is related to current and past water projects, which can be repaid with fees.

“We haven’t incurred any new debt since the 2009-2010 financial collapse,” Davidson said.

Repayments this year will total $2.56 million, including $1 million for water projects.

“We’re going to tap into reserves again this year,” Davidson said.

He said the city built up its reserves with the goal of tackling the debt.

“We’ve collected the money,” he said. “We need to be spending it and not hoarding it.”

Royer and Davidson both said there will be no capital projects in the budget.

“We’ve got to focus on repaying debt,” Davidson said.

The mayor said the city has restored staffing to the minimum levels required to operate, but no new positions will be added.

Royer said there would be no cost-of-living increases for city employees in the budget.

“We’ve been blessed the past few years we’ve been able to offer small cost-of-living increases,” Royer said. “Now, we’re just kind of at the point with this budget we’re just not going to be able to do it.

“Those are tough decisions to make. Our employees are dedicated, loyal and hard-working. We wish we could reward them.”

Royer said another issue is the loss of a Fire Department grant that funded about $400,000 in department salaries. He said the budget would continue to staff the department at current levels, but it would be difficult.

“We’re going to do what we can to try to maintain” current staff levels in the Fire Department, Royer said. “We are not back up to full staffing.”

Davidson said there is continued work to recover from the city’s financial crisis.

“Our cost, over time, is going to outpace revenue,” he said. “There’s going to be some very honest and straightforward conversations with our citizens over the next 18 months.”

Background

NEOSHO’S FINANCIAL CRISIS was revealed in 2009 when former City Manager Jan Blase acknowledged that the city had misused a state loan and other restricted money to make payroll and pay other city bills. It resulted in a nearly $1 million shortfall in the budget, resulting in laying off 25 percent of city employees and other spending cuts.

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