St. Paul finds balance sheet in better shape than expected

By GREGORY A. PATTERSON, Star Tribune

Last update: November 19, 2008 - 11:00 PM

St. Paul's general fund finances are in better shape than expected given the current economic troubles, but the city's budget experts foresee lower revenues from sales taxes, local government aid, hotels and motels and other sources next year.

With the final tally for the first 10 months complete, St. Paul officials said they expect general fund revenues of $187.1 million this year and spending of $186.5 million, leaving a balance of about $620,000. St. Paul's budget office delivered the news Wednesday at a City Council budget committee meeting.

"It is not as grim as I had first thought it was going to be," said Kathy Lantry, City Council president.

St. Paul Mayor Chris Coleman would like to spend the surplus on shoring up the budget for securing 2,000 abandoned homes in the city, said Margaret Kelly, the city's financial director.

But city officials have not yet fully reported on its most troubled area, the Department of Safety and Inspections, which is suffering a steep decline in the revenues it normally takes from building permits, inspections and business licenses. That department will have a $1.7 million shortfall for 2008. St. Paul officials also forecast a similar revenue decline for 2009, but have created a plan to fund the department with reserves and to employ many of its workers in the effort to secure the abandoned homes.

St. Paul budget officials will review the plans for spanning the budget shortfall at next Wednesday's meeting. They attribute the revenue decline from building permits and inspections to the economic downturn. "We're going to shift work off of inspecting and permitting to vacant buildings," Kelly said.

St. Paul has been able to stay on track financially largely because of a recently adopted policy of closely supervising hiring and expenses. Under the policy, every new hire and every expenditure of more than $5,000 must be approved by the mayor's office. "Continuing that will make sure that we come in on target," Kelly said.

Several revenue streams came in stronger than expected this year, including fees for monitoring vacant buildings, ambulance fees and franchise fees paid by businesses that provide services to consumers and businesses. On the other side of the equation, health-care expenses were higher than budget officials had planned.

While the situation is sound now, "We do still have a lot of risk out there -- even for the next fiscal year," Kelly said.

The city will probably suffer a decline in the amount of aid the state gives it annually. St. Paul officials have budgeted $62.6 million in state-sponsored local government assistance for next year, up from $56.7 million this year.

"It's likely we will lose some of that funding," Kelly said.

Gregory A. Patterson • 651-298-1546

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