State cuts reflected in city budget carryover

Staff Writer
Columbus CEO

The Athens City Auditor’s Office is hoping the state of Ohio will be kind to local municipalities in 2014, as the city’s budget could get a bit tight if cuts continue to trickle down to local governments.

Auditor Kathy Hecht and Deputy Auditor Laura Kreider said that revenue is expected to be flat for the upcoming fiscal year and that they’re hoping that the Ohio Senate doesn’t pass a proposed income tax uniformity bill that could have a big impact on municipalities.

On Friday, Hecht said that the city budgeted for some losses from the state in 2014, but that if the Senate passes the uniform tax legislation, the city could take an even bigger cut in revenue. Kreider said she believes the Senate is to introduce the bill in January. The bill narrowly passed the House on Nov. 13.

“I’m just glad (the Ohio Senate) didn’t try to rush it through before the end of the year,” Hecht said on Friday. As The Messenger previously reported, the city of Athens could lose an estimated $100,000 a year in revenue if the legislation is enacted as written.

Hecht said that city tax administrator Tina Timberman traveled to Portsmouth a few weeks ago to talk with Portsmouth’s state senator about the negative impact the legislation could have on local municipalities.

Uniform tax legislation aside, Hecht said the city of Athens took a cut of about $500,000 in state funding in 2013 alone.

She said, for example, that local government funds from the state have been dwindling for a number of years. The city received about $390,000 in local government funds from the state in 2013 — about half of the amount received three years prior.

According to Hecht, many municipalities around the state have already placed income tax increase measures on the ballot to try to make up for lost state funds.

“The burden is on us to try to raise that money,” Hecht said, noting that income tax revenue makes up about one-third of the city’s total budget. The city doesn’t have immediate plans to propose a tax increase, but Hecht noted that if revenue continues to dip then the city will be faced with either raising taxes or cutting services.

Hecht said that income tax revenue for 2013 was down by about $100,000, however the city was able to bring in approximately $200,000 in past-due income tax revenue from the years 2006-2010 by contracting with Cleveland Central Collection Agency. The agency has access to federal IRS information and compared it to the city’s income tax rosters to find delinquent taxpayers.

Hecht said the city would have been down $100,000 in income tax revenue for 2013 if not for the CCA collections. She said CCA will continue to attempt to get delinquent city income taxpayers to pay back taxes for the years 2006-2010, as well as for 2011. Hecht said she doesn’t anticipate as much delinquent tax payments to be made next year, compared to 2013.

After factoring in pay raises for union employees in the city, Hecht said the remainder of the 2014 looks pretty similar to 2013. The city’s 2013 budget was $33,763,182. The budget for 2014 is $34,134,994.

However, she said the state cuts have taken a toll on the city’s carryover, which is needed to pay expenses at the beginning of the new fiscal year.

The city started with over $1 million in carryover for 2013. For 2014, the carryover will only be around $700,000, Hecht said.

“The carryover isn’t where we want it to be,” Hecht said, noting that $700,000 only covers approximately two pay days for city employees, with no extra money to spare. She said it’s recommended that the carryover cover about six months of payroll in case major unexpected expenses occur.

The city is also anticipating two big construction projects this year — the start of the Richland South rehab project and water, sewer and street improvements on West Union Street. Hecht said that the city strives to get grants to help pay for large projects, but said the city is required to provide a local match for such grants.

“If the city gets a $1 million grant and there’s a 25 percent match, that’s $250,000 we have to come up with,” she said.

Hecht noted that the city often provides an in-kind match by having city employees do the work, but said that also costs the city money as those employees are not able to do other city work during those projects.

According to Hecht, the city has been under an unofficial hiring freeze for the past few years. She said that the city administration informs Athens City Council if anyone needs hired and she said that to her knowledge, Council has not rejected any hiring. Hecht said that no new positions have been created in the city for a few years and that some positions were eliminated through attrition in some departments, including her own.