By Jeff Gallatin
With a month go to go before the filing deadline, Bay Village officials found Monday they have a month to deal with a current deficit of about $482,000 between projected revenues and expenses in the 2013 municipal budget.
Finance Director Renee Mahoney and administration officials made a presentation on the annual budget as City Council introduced on first reading legislation for passing the budget. State law requires the city to have approved a balanced budget for the year by March.
“There’s no question we have a lot of work left to do,” Mayor Debbie Sutherland said prior to the council meeting. “We’re going to have to make some tough decisions because we’ve been making cuts the last several years, and there’s not really room to make any more without impacting services.”
She cited as major causes the cuts in state funding the last three years under Gov. John Kasich’s administration, through the eventual elimination of the estate tax as well as cuts of several hundred thousand in the local government fund. Sutherland and other area government officials have also been watching closely the progress of Ohio House Bill 5, a proposal to have income tax collections functions largely taken over at the state level.
Proponents have said the proposal is designed to streamline the income tax collection process for businesses. However, Sutherland and other opponents have said it will result in the loss of even more revenue for municipal governments at a time when they can’t afford any more losses. Initial projections from the Regional Income Tax Agency (which collects income tax for Bay Village and many other cities) is that Bay would lose about $178,000 annually.
“That’s not another hit we can absorb without losing services and people,” Sutherland said.
Sutherland declined to speculate whether the projected deficit of nearly $500,000 would result in loss of services or personnel, saying her administration needs to discuss the budget and possible options with council.
“There are areas in which council could raise additional revenue,” she said.
She said if council wanted to consider possible revenue streams, there were options. She cited the city trash fee, which is currently $12.50 per quarter and which raised $293,000 in 2012, the same figure Mahoney has it slotted for in the current 2013 budget proposal.
“It’s lower than many other communitiies,” she said. “Fairview Park’s is $10 per month as one example in our area.”
She said the city could also raise up to an additional $100,000 by changing the percentage fee collected by the city on monthly cable bills.
“It’s currently at three percent, and we could charge up to a maximum five percent,” she said. “It’s about $50,000 for each percentage point.”
Mahoney said the city raised $155,000 in 2012 from the cable fee.
Sutherland also said the city could consider altering the earned income tax credit in which the city gives residents who work outside Bay Village a credit for paying income taxes in the community in which they work. Administration figures estimate reducing the current 1 percent credit to .85 percent would raise about $600,000 for the city.
“We’ve got to consider different options to deal with these projections,” Sutherland said.
Council Finance Committee Chairman Mike Young said city officials would be looking at different options.
A review of expected purchases – among them, capital improvements purchases – for this year might yield some help, Young said.
“Next year we’ll have some bond and other long-term expenditure payments which will be concluded,” he said. “Normally, we spend between 2 to 4 percent of the budget on capital expenditures. But, with those payments dropping off next year, It’s possible we could defer some capital expenditures we would normally do this year, until next year, because we could have additional funds from the other payments ending. That means we could use some of the money we would normally spend on capital improvements this year to help make up the budget shortfall.”
Young noted different areas for possibly gaining revenue and said council would also would review the sewer fee. He said the money raised from it only covers the operational expenses of the sewer system.
“We’re not in a position to keep covering capital expenses and (federal) EPA mandates for the sewers with our general fund, so we could be looking at some changes in the sewer fee at some point to help cover those type of costs,” he said.
In addition, Young noted council and the administration have had different opinions about potential cost savings in other areas of the budget, such as the police and fire departments, saying council’s review of the other costs could yield other savings.