10-year budget trend: Revenue more than doubles, spending almost triples

Here is the text of a speech about city finances that Mayor A.J. Holloway delivered to luncheon meetings of the Edgewater Rotary (Aug. 13, 2003) and Biloxi Businessmen’s Club (Aug. 14, 2003).

Thank you for having me here today. I’m glad to see so many of you this afternoon.

The City Council and I right now are working on the city budget for the next year, and we expect to have things wrapped up in the next several weeks.

Today, I want to give you some insight on the challenges we’re facing and how we’re going to deal with them as we move closer to October 1.

And let me say this: You hear a lot of people talk about city finances, and I’m going to be as honest and forthcoming as I can today. I’m going to tell the truth.

We have what you could call an interesting situation here in Biloxi. Some people think that with all of the casinos in town, we have a bottomless pit of money at City Hall.

Some of you may remember what I said when this issue came up before: We’re healthy, not wealthy.

To be honest, if you look at the audit from last year, and you can see it on our website, in the past few years we’ve been spending more money than we’ve had coming in on an annual basis.

It’s an interesting trend to look at.

The city’s revenue in the past 10 years – that’s the total amount collected from property taxes, the tax on casino gaming revenue, sales tax, money collected from the increasing number of licenses and permits, and charges for services – has more than doubled.

It went from 29.4 million dollars in FY ’93 to 62.3 million dollars in FY 02.

And at the same time, the city’s expenditures in the past 10 years – the total amount of money spent in various city departments and money paid on long-term debt – has almost tripled.

It went from 26.6 million dollars in FY ‘93 to 72 million dollars in FY ’02.

That’s right: The city’s revenue has doubled while expenses have tripled.
In FY ’02, we had 62 million in revenue, and we spent 72 million. And that’s not a bad thing. Let me explain.

The reason that the annual expenditures are larger than annual revenue is because a portion of the long-term improvements that we are making are being funded through long-term bonds.

We used long-term bonds to fund major projects like the 9.1 million dollar public safety center, the 4.2 million dollar Donal Snyder Community Center, and the work that we’re doing on the sports complex, which is going to be a 10 million dollar facility when all is said and done.

The work you’re seeing going on right now to widen Popp’s Ferry Road, the Caillavet Street re-development and the new Back Bay Boulevard are going to benefit us for years to come, so we’re going to be paying for them over the long term.

In fact, we’re going to be using money generated by businesses locating on these streets to pay off a good bit of the bonds. I like that idea better than me and you having to pay for them totally.

We’ve also gotten a better handle on long-term debt. We’ve paid it down. We’ve gone from paying more than 8 million dollars in debt service in 1993, down to 4.4 million during FY ‘02.

We’ve been able to get a good interest rate on long-term debt because the financial analysts who monitor us see that we’re being fiscally responsible and fiscally conservative.

What makes us different from other cities is that we’ve been trying to spend cash as often as we can on major projects, where other cities not in our position may have to lean more on borrowing.

Now, all of that brings us to where we are today.

Our revenues have been flat in the past year. And we’re lucky that we can say that. With the national economy in the shape that it’s in at the moment, a lot of cities have far more challenges than we do.

Going into this budget, the amount of revenue is expected to be only marginally more than the total revenue for the city last year.

And when we’re working up our budget for the next year, we base it only on what we actually received the prior year.

We’re expecting to have 52.4 million dollars in revenue next fiscal year. 36 percent of that revenue will come from the tax on gaming revenue. 22 percent will come from sales tax collections. Only 15 percent will come from property taxes.

And that’s where the challenges come in. In the next few weeks, we’re going to begin construction on two new fire stations, one to replace the station we have now on Howard Avenue in east Biloxi, and a brand new station in Woolmarket.

This will be the first time since the 1930s that we will have two fire stations under construction at the same time.

That Woolmarket station means that we’ll have a dozen or more additional firefighters fully funded in the new budget.

And we’ll be bringing a significant portion of the new sports complex online in the next few weeks, which means we’ll need staffing and maintenance for that in the new budget, too.

Among the capital projects we’re proposing are continuing work on installing water and sewer systems in Woolmarket; repairing bridges on Lorraine Road and Bayview; continuing our drainage work in Petit Bois and Sunkist; and the next phase at the sports complex.

We’ll also be spending a half-million dollars on new public safety radios as part of the countywide communications plan, and 250,000 dollars for the Biloxi Port Commission. In all, we’re looking at 13 million dollars in capital projects.

So that’s our challenge: Drafting a budget that includes all of those new things, providing the level of service that you and your neighbors have become accustomed to, and doing it all with the same revenue levels in the current budget –and doing it without any new taxes.

I suppose that’s my message here today. Yes, we are excited about how things are moving here in Biloxi. We’re holding our own, and we have a lot of great things happening.

The notion that Biloxi is flush with money is offset almost immediately by the fact that we are flush with responsibilities.

It’s not easy to get people fired up about a ribbon cutting at a water well, or painting a new water tower like the one at Cedar Lake and I-10, but these things and the new roads and new schools are vitally important to continuing the growth of the economy here in Biloxi. And that benefits everyone.

We just opened the Home Depot in the Cedar Lake commercial district. Building permits are holding their own in a challenging economy.

With construction management, we’re building capital projects at a faster rate than at any other time in the past.
That alleged surplus — which is actually money set aside for capital projects — is rapidly going into the ground in projects throughout the city.

We’re on track to spending 20 million dollars on major projects in this fiscal year.

Just to put this in perspective for you, let’s go back to the 10-year report in the audit. In FY ‘93, the city spent 930,000 dollars on capital outlay. In FY ’02 alone, that number was at 18 million dollars.

The year before that it was 17.7 million dollars, and three years ago it was 27 million dollars. That’s more than 82 million in four years — on improved drainage, new streets and new city facilities to serve you better.

I’m proud of the work that we’ve been doing, and I’m just as proud that we’re doing the work in ALL areas of the city.

The important message I want you to hear today is this: We are blessed with revenue, but at the same time we’re investing that revenue in our community through public improvement projects citywide to benefit all of us.

Thank you and God bless you.

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