Mayor Sandy Stimpson’s $309 million proposed general fund and capital budgets include increased revenue, as well as increases to public safety, facilities and capital expenses.

Despite a $4 million increase in revenue and a $6 million increase in overall spending, the administration is looking to cut most of the city’s performance contracts with a number of nonprofit organizations.

Executive Director of Finance and acting Chief of Staff Paul Wesch said the city is in a period of “benign” increases in sales tax revenues. As a result, staff aimed at a “mild reduction” in the funding of nonprofit groups. There were two exceptions, Wesch said — for multi-year contracts and for groups with missions closely aligned with the city’s work.

For instance, the Dollar General Bowl and Visit Mobile were spared because of multi-year contracts and the Child Advocacy Center’s funding stayed flat. The Mobile Youth Athletic Board saw a $20,000 increase to $120,000 this year, but that is due to an increase in the alcohol tax funds earmarked for youth athletic organizations.

The board is entitled to half of the alcohol tax money the city receives. It had been budgeted a bit too conservatively over the years, which is why it’s increasing now, Wesch said.

City funds to the Mobile Bay National Estuary Foundation (NEP) will more than double in fiscal year 2019, according to the proposed budget. Wesch said the increase corresponds to programs the NEP will administer related to the Three Mile Creek watershed.

“They’re doing it for a whole lot cheaper than we could do it,” Wesch said. “We’re very thankful about that.”

The Public Park and Recreation Board of the City of Mobile, better known as the Ladd-Peebles Stadium board, will not see a reduction in 2019. However, while spending on public facilities in set to increase by some $2 million, the Ladd board will not see an increase.

The Mobile City Council recently rejected a plan that would send the University of South Alabama $500,000 from the city’s economic development money per year for 20 years to help pay for an on-campus stadium. In return, the school would have given the city $2.5 million to renovate Ladd.

The city has recently completed a facilities assessment, which showed more than $225 million in maintenance costs on city-owned structures moving forward. The city is developing a plan to “repair, replace or sell” structures.

The administration is projecting a $4 million increase in revenue. Wesch said this is largely based on an increase in sales tax revenue and license fees.

“During the late spring of 2018, we began to experience increases in general sales taxes,” Wesch said. “We do feel comfortable with looking at an increase in sales tax.”

The increase is bolstered by the city’s portion of tax on hotel room stays, Wesch said. Mobile has seen an increase in the number of tourists, from 3 million visitors to 3.4 million.

“I think most of that is the success of Visit Mobile to attract the leisure traveler,” Wesch said. “Leisure travel is a home run for the city … To see this rise is extremely beneficial and surely we hope it will continue.”

Changes by the Legislature to the simplified sellers use tax, or SSUT, has also increased revenue, leading to a more even distribution of the tax on e-commerce items between counties and cities, as well as a tax on third-party sellers online. The changes are expected to increase revenue from about $200,000 per year to $2 million.

“We think $2 million is somewhat conservative,” Wesch said.

Online sales and e-commerce, however, will provide budgetary pressures on the city going forward. Because the SSUT does not tax businesses at the same rate as the city does, e-commerce has reduced the percentage of sales tax revenue to total revenue. Sales tax revenue used to make up 82 percent of the city’s total revenue, but now makes up 78 percent, Wesch said.

The estimated uncollected sales tax on e-commerce is about $11 million.

While the city has reduced debt service by some $2 million over the last three years by refinancing loans to take advantage of lower interest rates, pension costs total $30 million, 50 percent more than what was required five years ago.

In his budget statement to councilors, Stimpson wrote that the balance of pension and health care unfunded liabilities has been reduced overall from $473 million to $374 million.

“This is primarily a result of the transition of Medicare-eligible retirees to a Medicare Advantage plan, and secondarily the result of an amortized paydown of the unfunded liability in the City of Mobile Police and Firefighter Pension Plan,” he wrote.

The administration has reduced the number of city employees through attrition from about 2,480 to 2,200 over the last four years, Wesch said. He said the city is probably now getting close to the right number of employees. The administration had noticed previously that the ratio of employees to citizens was “a little off,” Wesch said.

There are no citywide pay raises in the 2019 budget, as the administration wants to absorb the changes in public safety spending caused by raises for both police officers and firefighters last year.

“We hope to address cost of living in the future,” Wesch said.

The budget includes a $2 million increase in spending for Public Works. Wesch said issues with garbage and trash pickup have been solved and that new director John Peavy requested the budget increase.

The Mobile Public Library will see about a $500,000 reduction in its allocation from the city, Wesch said.

“We have no relationship with the library, except we partially fund them and provide the buildings they’re in,” Wesch said. “We do know our library costs have generally been in excess of what our peer cities spend.”

The proposed budget now goes to the City Council for final approval. The council has until Sept. 20 to pass it.