St. Charles’ First Street project becoming a budget factor

Ongoing delays in the completion of St. Charles’ key downtown development project will begin to threaten the city’s financial health beginning with the next fiscal year.

St. Charles is still on pace to complete its current fiscal year at the end of April with a $369,000 surplus. The city has weathered the economy with employee buyouts, freezes to some city programs and cash boosters like the city’s new alcohol tax. Those moves plus a better collection of hotel and income tax dollars fueled the surplus.

But next year, the financial cushion the city built into the First Street Development project disappears. The city borrowed a little extra money in the additional bonds to allow some time for First Street construction before the project started raking in new revenue. The project is still not complete, but the extra bond money is gone.

City Finance Director Chris Minick unveiled the proposed budget for the 2012-13 Fiscal Year Monday night. If all goes according to Minick’s plans, the city would end next year with an operating surplus of about $134,000.

However, the tax increment finance district the First Street project is part of is owed nearly $900,000 next year. That $900,000 was supposed to be paid by revenue the project should have generated by now. Instead, the city will have to pay that money out of the general fund.

That $900,000 bill would normally more than erase the projected surplus for next year. However, with the persistent delays in the completion of First Street, the city set aside $3 million as a debt service reserve to extend the cushion originally provided by the initial bonds. That will allow the city to still reflect a balanced budget in the general fund for next year.

That’s good news for residents because that balanced budget includes adding back in some expenses that had been eliminated at the height of the economic downturn.

Key among those is the return of the popular spring cleaning program. If aldermen approve the budget as city officials presented, the program would kick in some time shortly after May 1. An expectation of a slow uptick in city income will help pay for those new programs.

There are no new taxes or tax increases proposed in the new budget. However, there is an increase to the refuse fee residents pay. The average resident will pay about 70 cents more per month for trash collection.

Residents have a chance to ask questions or comment on the budget at a meeting on April 2. Aldermen will vote on the budget April 16.