EXECUTIVE SUMMARY

The proposed FY1999 Annual Operating Plan reflects a continued commitment to enhance the quality of life for the City's residents and ensure that visitors and commuters alike enjoy a pleasant stay. In furthering this commitment, the proposed allocation of general revenues reflects many of the service priorities desired by City residents, specifically in the areas of public safety and neighborhood stabilization. The plan also strives to ensure that City departments and agencies charged with providing these services are well equipped and prepared to provide them both efficiently and effectively.

In the area of public safety, the operating budget includes an increase of approximately $800,000 to accommodate the full year cost of two police hiring grants that expired in FY1998. In recent years, these grants from the Bureau of Justice Assistance have provided for the addition of 48 uniformed police officers whose funding is continued with this commitment of City funds.

The proposed FY1999 operating plan includes funds for scheduled debt payments on the new justice center and anticipates the issuance of additional bonds to complete the project. The proposed redesign of the facility would consolidate prisoner processing and holdover functions of the Police Department with those of the Corrections Division. The project is estimated to be completed by the beginning of FY2002.

Approximately $130,000 in funds is provided to the City's Fire Department for the purchase of an automated information retrieval system for its Emergency Medical Service section (EMS) and for insurance verification and billing services for the EMS billing operation. The automated retrieval system wills both enhance EMS's ability to provide accurate patient billing information as well as allow EMT's and paramedics to focus more on patient care and less on information retrieval. The EMS billing section has realized a 45% increase in revenues to date in FY98 and with these billing enhancements should be able to continue this progress in the coming fiscal year.

In FY1999, the City's judicial offices will for the second year be purchasing computer equipment and related services as part of the on-going Electronic Court - 2004" state computerization initiative. The office of the Circuit Attorney will likewise be upgrading computer equipment to take advantage of a new case management system offered free of charge by the State of Missouri. This new system will ultimately provide savings by eliminating the cost associated with REJIS services for that office. With a decline in the number of juvenile placements in recent years, the cost of institutional payments of the Juvenile Division of the Circuit Court will decrease by about $950,000.

The issue of public safety capital needs will remain a concern in the coming fiscal year. The City's last general obligation bond issue was in 1986. The fire equipment and improvements purchased with those funds are now over eleven years old. In FY1999, the City will seek voter approval for a new bond issue to address these needs. In the meantime, $2.5 million in projected surplus revenues in the current fiscal year are being appropriated for the replacement of the City's antiquated warning siren system.

The neighborhood stabilization effort includes an additional $550,000 in personnel costs for the continued expansion of the Forestry Division's weed and debris control programs and $80,000 for enhanced legal support of nuisance property abatement efforts. Combined with continued efforts of the trash task force and use of capital funds for abandoned building demolition, these programs provide a means for stabilizing neighborhoods and improving prospects of future housing and other development.

In FY1999, the City's Health Division will see an increase in general funds for health programs to provide better tracking capabilities of infectious diseases and other health service data and to respond to increasing restrictions placed on grant funded activities.

In recent years the City has made great strides in updating its computing capabilities. Operating departments continue to find new efficiencies as a result of being "networked". In order to manage the growing number of computer networks, departments coming on-line and particularly the challenge of the Year 2000 problem, the Information Systems section of the Budget Division will increase approximately $0.5 million in personnel and equipment. An additional $0.5 million is being allocated from the communications fund balance to provide for contractual services to specifically supplement the Year 2000 effort.

Other provisions in the proposed Annual Operating Plan include funds for the four citywide elections that will occur in FY1999 and allocations for cost of living adjustments for police officers, firefighters and other City employees.

The Capital Improvements budget contains $2.6 million in funds to complete the Civil Courts Building renovation project and allocates $1.0 million in design work for the previously discussed Justice Center. Arterial street paving and bridge repair remains a priority with funding provided to maximize the matching funds available under the federal surface transportation (ISTEA) program. Allocations for the replacement of rolling stock, lease debt payments and budgets for various neighborhood, park and recreation center improvements are also included. In FY1999, the one-half cent capital improvement sales tax is projected to provide another $17.5 million to address the City's capital needs. Of this amount one-half or $8.75 million will be allocated to the 28 wards of the City for various neighborhood improvement projects. In FY1998, Lambert International Airport witnessed the opening of its expanded East Terminal and soon anticipates FAA action on the proposed Airport Expansion plan. Meanwhile, the Airport continues to set new passenger records, serving over 27.6 million passengers in 1997. The proposed Airport budget reflects some increase in personnel and debt payments related to these activities.

Summary

In summary, the total budget appropriation for FY1999 is $652.1 million. Over 50%, or $360.7 million, is appropriated from general revenue to pay for day-to-day City operations. City general funds are supplemented by approximately $44 million in grants from State and Federal Sources. The remainder of the budget comes from a variety of special and enterprise funds maintained by the City in compliance with specific ordinances or agreements. The allocation of these funds is designed to make the City of St. Louis a more desirable place to live, work, and do business. The allocation also reflects the City administration's goal of providing an effective and responsive city government as well as one that can deliver a wide range of recreational, entertaining, and cultural experiences. The service enhancements and infrastructure improvements funded in this plan will promote growth in future economic activity, which will in turn produce tangible results in jobs and fiscal stability.

GENERAL FUND OVERVIEW

Sources of Funds

Total funds available for appropriation for FY1999 are $360.7 million. This represents a 2.4% percent increase over the revised FY1998 estimate. The revenue forecast is based on continued growth of both the earnings and payroll taxes, as well as increases in gross receipts based license fees. Sales tax growth has remained sluggish during the current year. The FY1999 forecast calls for growth of about 1.8% over revised FY1998 estimates. Franchise utility taxes should show a modest recovery from FY1998 without a repeat of this year's unusually mild winter. Intergovernmental revenues continue to remain relatively flat with a slight increase in the motor vehicle sales tax. Departmental revenues will see a decline mainly due to the fact that the City will no longer be serving as the agent for distributing general relief payments from the State. These funds will now flow directly to health care providers.

Uses of Funds

The proposed FY1999 Annual Operating Plan includes a General Fund budget that provides for public safety and neighborhood improvement concerns and seeks to ensure that City departments and agencies are prepared to deliver the many services on which residents and visitors alike rely. Some of the highlights of the general fund budget are presented on the previous table. In general these include providing general revenues to offset expired and/or restricted grant funding for Police officers and certain health programs, providing for cost-of-living adjustments for police, firefighters and other city employees and ensuring that the City meets contractual requirements on lease debt and other obligations. Specific initiatives include an expanded effort to clean vacant lots, buildings and alleys, a $0.5 million allocation to support the development activities of the St. Louis Development Corporation and the purchase of an automated data retrieval system for the Emergency Medical Service of the Fire Department. The Information Services Section of the City Budget Division will be adding personnel and support in order to meet the growing information service needs and the Year 2000 problem. The Budget Division is also seeking to establish a program to identify grant-funding opportunities and provide technical assistance in the preparation of grant applications. The FY1999 general fund budget also provides approximately $1.1 million to the Election Board for four citywide elections that will occur during the coming fiscal year.

The following charts illustrate the sources and uses of funds of the FY1999 general fund budget.

Projected Operating Results

Based on the projected revenues and appropriations discussed above, we expect to end fiscal year FY1999 with a general fund operating balance of approximately $23,000. The FY1998 operating balance is currently projected at 5.0 million. In FY99, this surplus will be appropriated to the capital fund so that the City can replace its emergency siren warning system among other capital items. The City's unreserved general fund balance will increase by about $1.9 million, however, as a result of the release of reserved funds following the settlement of the local use tax liability. In FY99 the unreserved general fund balance is estimated to be approximately $14.6 million or about 4.0% of the FY1999 General Fund Budget.

CAPITAL IMPROVEMENTS

The City of St. Louis' Capital Committee has proposed a five-year-capital improvement plan that totals $172 million. The City's FY1999 capital budget funds this first year of this plan with a recommended appropriation of $41.9 million. The one-half cent sales tax for capital improvements will generate $17.5 million approximately the same amount as in FY1999 and about 42% of the total FY1999 capital budget. The proposed capital budget incorporates $6.2 million in payments from the sale of Columbia Bottoms, $2.8 million from projected gaming revenues, $12.6 million in general fund transfers, and $2.8 million from other sources.

Capital improvement projects planned for FY1999 include road and bridge improvement projects, neighborhood stabilization projects, and facility improvements and equipment replacement. Highlights of the capital budget include:

• $27.8 million in Citywide Capital Improvements: Citywide projects include existing debt payments on the Civil Courts and Justice Center projects, road and bridge improvements, equipment replacement, improvements to city buildings and structures and replacement of the City's siren warning system. Included in the improvements to city buildings and structures category are funding for design of the Justice Center, continued additions to the Civil Courts project, and initial funding for building a flood wall along the River des Peres.

• $8.75 million in Ward Improvements: Each ward will receive $312,000 for projects such as neighborhood park improvements, residential street resurfacing, street lighting enhancements, and dumpster replacement. Additionally, the Citizen's Advisory Committee for Capital Improvements has recommended that a portion of these funds be allocated to replace the current emergency warning siren system.

• $3.0 million for Major Parks Improvements: The City's six major parks, Forest, Tower Grove, Carondelet, Fairgrounds, O'Fallon and Willmore receive dedicated funding for capital improvements. In addition to the major renovations ongoing in Forest Park, planned improvements in fiscal 1999 include the construction of tennis courts in Carondelet and Willmore Parks, renovation of several structures in Tower Grove Park, playground and ballfield upgrades in Fairgrounds Park, and continued roadway construction in O'Fallon Park.
• $0.5 million for Recreation Center Improvements: Various improvement projects will be undertaken at some of the city's ten recreation centers. Slated for funding in fiscal 1999 is completion of the air conditioning project at Tandy Center as well as lighting upgrades at Buder Center. In addition, improvements will continue to be made at other centers in an ongoing effort to bring all relevant structures into compliance with the Americans with Disabilities Act.

• $1.8 million for the Police Department: The Police Department will use a portion of its sales tax proceeds to pay debt service on the area command stations. Funds not required for the command stations project will be used to offset increased costs of the Justice Center project incurred as a result of design changes to accommodate a prisoner processing center.

The remainder of this budget document is divided into the following sections:

Budget Overview: This section provides a more detailed discussion of the City's projected revenues and expenditures. The discussion includes an overall economic outlook for the City and includes summary tables illustrating projected revenues and appropriations for all funds.

Department and Program Budgets: This section is divided by major City departments. Each department begins with a summary of budget statistics and is followed by division and program budgets within each department.

The division and program budgets are presented in a format that contains narrative information about respective programs and identifies outputs and projected performance levels.

Capital Improvements: The City's FY1999 Capital Budget and Capital Improvement Plan are presented in this section. A detailed discussion of the five year plan and description for each capital project are being submitted under a separate cover.

Appendix: The appendix includes supplemental information about the City and its budget including debt issues, the budget process, trends in personnel, etc.