Ellisville Mayor Matt Pirrello met with residents Thursday to address a slowdown in cash-flow and rise in business costs, and hinted that the city council is seriously considering a sales tax increase.

Roughly 35 residents attended the informal gathering, one of seven "town hall" meetings scheduled leading up to next month's approval of the 2011 budget.

"While we're at this juncture, there's no need to panic," Pirrello said. "But the writing's on the wall. If we keep doing what we're doing and expecting the same results, we've got a problem on our hands."

Pirrello said the city's annual budget, which is roughly $8 million, has remained relatively stable since 2002 in terms of real dollars. But with a recent recession that's devalued the dollar's buying power, more money will be needed to maintain current operations, he said.

"So as a result, in inflation-adjusted dollars, we're trying to do the same thing with a lot less," Pirrello said.

Ellisville is one of just three cities among St. Louis County's 91 municipalities that don't employ a capital improvement sales tax, he said, which is used for functions such as road or building maintenance.

Should the city council approve a local sales tax, the issue would go before voters as a referendum in the upcoming April elections. If voters OK'ed the tax, it would take effect in October 2011.

Presently, Ellisville does get proceeds from a 1 percent county sales tax. Municipal governments receive .75 percent of those funds, which then are earmarked for parks and recreation as well as road improvements.

Pirrello said that when considering potential sales tax measures, it's important to note that roughly 60 percent of sales tax funds comes from non-residents.

Ellisville resident Nick Rudd, 32, said he isn't necessarily opposed to a sales tax increase, but questioned why Ellisville is among such a small minority of cities without one.

"Why is it that we've been holding out so long?" Rudd said.

Pirrello also cited concerns Thursday about "dilapidated" equipment within the public works department, which could pose problems and even safety issues when it comes to functions like snow removal.

"We're not in the hole, but we're going to spend more than we have, which is going to leave a remaining balance of $660,000."

The issue has been delayed by inflated revenues from red-light camera tickets at the intersection of Clarkson and Manchester roads, which were given to more than 17,000 violators the first 13 months the cameras were active.

Pirrello said the cameras generated about $400,000 for the city, which then was  allocated to the city's central budget, "so we could keep the budget balanced and keep the status quo," he said. "That's how we've kept the wolves at bay."

Other budget solutions are being considered, he said, which includes selling city-owned land and requiring residents to pay for their own trash pick-up, which would free roughly $500,000 each year. The city also is considering a proposal that could lead to the construction of a Walmart Superstore, which Pirello estimated would bring in about $650,000 annually.

Cities such as Chesterfield already took action this year to contain upcoming budgets by laying off employees; Chesterfield eliminated 19 positions in September, including those of several police officers.

Pirrello said that even laying off city workers, however, probably wouldn't yield a significant improvement to the budget.

"That's not substantial," Pirrello said. "$100,000 is not gong to make up our shortfall over the course of the next five years."

Upcoming Ellisville Town Hall Meetings:

(All meetings will be held at the Parks Administration Building)

Editor's Note: This article was updated at 4:50 p.m. on Dec. 29. A previous version of this article incorrectly cited Ellisville's red light camera revenues.