Hoover Mayor Brocato proposes slight deficit budget for 2018 as revenues lag

With revenues coming in lower than expected in 2017, Hoover Mayor Frank Brocato tonight proposed a slight deficit budget for the city’s general fund in fiscal 2018.

He’s proposing to spend $113.9 million from the general fund but take in only $111 million in revenues.

Brocato plans to make up the difference by transferring almost $7.4 million from the city’s capital projects fund.

However, this doesn’t take into account that city officials expect to end 2017 with a surplus of about $7 million as well, Chief Financial Officer Melinda Lopez said. With revenues lagging, city officials kept a rein on spending, she said.

When the 2017 budget was passed in February, city officials anticipated ending fiscal 2017 with $112.3 million in revenues for the general fund, but with less than one month to go in the fiscal year, new projections anticipate $1.6 million less than that, Lopez said.

City officials are taking a conservative “wait-and-see” approach with the 2018 budget, projecting $111 million in revenues for the general fund, Lopez said.

Total revenues for all governmental funds, including capital projects and special revenue funds, are projected at about $120 million. Total expenditures for all governmental funds are expected to be $131.5 million, leaving a difference of almost $11.6 million.

Carryover funds from 2017 should help counter that difference.

Because of the decline in revenues, the mayor’s budget limits the amount of money to be spent on new projects, Lopez said.

There is, however, $10.6 million set aside for capital projects, including $2 million for paving projects throughout the city, $1.5 million for improvements to South Shades Crest Road, $1.4 million for an upgrade of the city’s information technology system, $1 million for replacing the drainage system and turf at Hoover Metropolitan Stadium and $500,000 for a new police training facility.

South Shades Crest road improvements

The improvements for South Shades Crest Road actually are estimated to cost $3 million, but city officials are hoping to get financial support from Jefferson County in fiscal 2019 to assist with that project, City Administrator Allan Rice said.

The project includes adding a second northbound lane from Willow Lake Drive, which is the entrance to South Shades Crest Elementary School, all the way to John Hawkins Parkway, Rice said. Traffic heading north on South Shades Crest Road toward John Hawkins Parkway would no longer have to stop at the traffic light at Willow Lake Drive, he said.

A traffic study done for that area offered three alternatives to improve traffic flow in the congested area, and it turns out the most effective solution also is the less expensive, Rice said.

The project will not require widening the bridge over Interstate 459 but will require an expansion of the bridge over CSX railroad tracks, Rice said. Engineering and design work, right-of-way acquisition, talks with CSX and potentially utility relocation should occur in fiscal 2018, but construction likely won’t start until fiscal 2019, said Tim Westhoven, the city’s chief of operations.

“That’s a lot longer than we want it to take. We know there’s a need out there right now,” Rice said. But at least we’ve identified a way to improve traffic flow and are moving forward on it, he said.

Personnel costs to rise by $1 million

The 2018 proposed budget includes money for three new part-time reserve police officers to provide security at the Hoover Public Library and two new part-time reserve police officers to work in elementary schools, Lopez said. That would leave only one Hoover elementary school without a dedicated police officer, she said. Currently, some of the Hoover schools share an officer, she said.

The proposed budget also eliminates a battalion chief spot in the Fire Department and a senior administrative assistant position in the Police Department. Both positions are now vacant.

Retirment costs are expected to decrease in 2018, but health insurance costs are projected to rise by $350,000, and step pay increases should cost the city $850,000, Lopez said.

Total personnel costs are expected at $68.4, which is a little more than $1 million greater than in 2017, Lopez said. That covers 652 full-time employees, 103 part-time employees, 46 temporary seasonal employees and the city’s eight elected officials, she said. About 57 percent of the city’s personnel budget goes to the police and fire departments.

Reducing overtime expenses was a goal of the 2017 budget, which was approved in March. Department heads have made some improvement on that end, but it’s something on which they will continue to work, Rice said. They had the difficult task this year of trying to cut costs while also figuring out how to properly staff the Finley Center, he said. That affects multiple departments, including police, fire, building services and revenue, he said.

Overtime expenses for 2017 likely will come in slightly over budget, Lopez said.

Rice said that’s a cost that can get out of control quickly, and while some overtime events are unexpected and unavoidable, city officials want to control costs where they can.

The city’s annual debt payments rose from $9 million in 2016 to $13.3 million in 2017 thanks to new debt associated with the Hoover Metropolitan Complex expansion, but those payments will decline to $11.8 million in 2018 and $6.5 million in 2023, city records show.

Rice said as revenues hit a slump, Hoover officials have to be conservative. “There’s not a crisis, but to avert getting in a crisis, we need to move methodically,” he said.

Brocato said city officials aren’t sure whether the downturn in revenues is a trend or an aberration, but the city has made every effort with the 2018 budget to fund the needs of residents and will continue to fund the services to which residents have been accustomed.

The Hoover City Council plans to hold budget hearings with city department heads from 10 a.m. to 4 p.m. on Monday, Sept. 11 (different start time than originally planned), and 9 a.m. to 4 p.m. on Tuesday, Sept. 12. The council is expected to vote on the budget at a special-called meeting on Sept. 29. All of those meetings will be in the William J. Billingsley Council Chambers at the Hoover Municipal Center and are open to the public.

The 2018 fiscal year begins Oct. 1. See the city's official summary of the mayor's 2018 proposed budget here.