Springfield Business Journal_2021-05-10

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In 2020, the city assisted two new businesses and four exist- ing businesses with $20.4 mil- lion in capital investment via the Enhanced Enterprise Zone program, and nine Springfield Regional Economic Development Partnership projects repre- sented $290 million in new capital, Holt- mann said. Personal income in Springfield is mea- sured in part by median household income, which in 2019 was $35,677, according to census data. That’s far below the same number for the Springfield metropolitan statistical area, at $47,034, and the state figure of $57,409. Springfield’s median household income has been lower than the region and state since at least 2010. City Manager Jason Gage said that’s likely brought down by col- lege students who are counted in the U.S. census. “Even so, that is an alarming number, and it should be alarming,” Gage said at council’s May 4 budget workshop. “As we continue to think about economic vitality, we have to think about what that really means. What that shows me is whatever we’ve done in the past hasn’t really helped a lot.” Positive ending Last year, council adopted a $368 million budget, a decrease of about $12 million from the previous fiscal year. The largest portion of the city’s budget is made up of special revenue funds, includ- ing the art museum, emergency communi- cations, parks and transportation. Special revenue funds make up about 33% of the budget, but revenues in the fund are re- stricted within those areas, Holtmann said. The city’s general fund, which includes the Police, Fire, Planning and Development, and Public Works departments, makes up 22% of the total budget, and includes the bulk of the city’s unrestricted taxes, Holt- mann said. Enterprise funds, including the airport and clean water services, comprise about 24% of the budget, and the remainder goes to capital projects, debt service, grants and internal services. As the city approaches the current fiscal year end June 30, Holtmann said officials anticipate higher revenue than originally bud- geted from some sources. The city’s largest source of revenue, coming in at one-third of the budget and 60% of the general fund, is sales and use taxes. As the previous budget pro- cess began shortly after a stay- at-home order was put into place due to the COVID-19 pandemic, Gage and city staff implemented cost-saving mea- sures in the budget out of concern for the financial impact, including a decrease in sales and use tax revenue. However, Holtmann said the city is set to exceed the estimated amount. Officials project $47.7 million in sales and use tax collections by June 30, roughly $3.4 million above budget. “We were really concerned moving into this year. We thought it was going to con- tract by about 6%,” Holtmann said. “We’re showing good signs in sales tax, such that we’re seeing steady growth during this last 12-month period.” Through March, the city had budgeted $30.1 million in sales and use tax revenue. The actual revenue collected through March is $32.5 million – an increase of just over 8%. The city’s second largest revenue source is payments in lieu of taxes from City Utilities of Springfield, which make up 20% of general fund revenue. The city is also projecting a higher revenue from the PI- LOT source than originally budgeted. The fiscal 2021 bud- get included $14.7 million in PILOT revenue, and the city is now projecting $16.2 million by the end of the fiscal year. The PILOT revenue is one that can be hard to predict, Holtmann said. After one week of extreme weather in February, increased energy us- age boosted CU’s distribution of funds by $1.5 million. “It’s good for the city in that it’s addi- tional revenue, but we can’t use that as a foundation to project next year’s PILOT revenue,” Holtmann said. “We have to look at that $1.5 million and say this is a source City officials anticipate revenue bump as fiscal year ends See BUDGET on page 18 David Holtmann: City anticipated a negative effect on sales tax revenue from the pandemic. Jason Gage: The proposed budget funds $2.7 million in requests from city departments.