By Jeff Gallatin
Mayor Debbie Sutherland said Monday based on her administration’s projections of a $820,000 gap between revenues and expenditures for the 2012 city budget, city officials have some hard decisions to make in coming months.
Sutherland presented City Council with her administration’s initial budget figures at Monday’s regular council meeting. She said the city could deal with the projected deficit in different ways. Sutherland said the city could cut programs deemed as non-essential. She said it could cut fund transfers from the general fund to other funds such as recreation, although she noted means would then have to be found to pay for the recreation department’s needs. It could use a blend of cuts and finding other sources of revenue. It could lower the earned income tax credit for city residents from 1 percent to .8 percent, which would raise about $780,000 or it could utilize user fees by raising existing ones or putting new ones in place.
Sutherland said she personally would prefer a combination of trimming where it can and utilizing other sources of revenue. Sutherland said one method could be using the $11.75 million reserve fund, She said taking $750,000 from the city reserve fund to help deal with the projected shortfall and finding various areas to cut throughout other areas of the budget could close the projected financial gap.
“There’s going to have to be some tough decisions made with all of this,” she said. “We’ll get through this, we just have some decisions to make.”
Sutherland cited cuts made by Gov. John Kasich and the state legislature to various funding sources used by the city for year – such as the local government fund and estate tax – as among the primary culprits for the shortfall. She also cited flat real estate tax collections again in the city as hurting the city revenue sources.
“Based on the formula projections we’ve had as well as the governor’s cuts, we’ve got $310,000 in for the estate tax for this year, as opposed to it being $430,000 next year, but we know it’s being phased out long term,” she said. “We lost $75,000 in the local government fund from the state this year and it’s going to be down another $220,000 in the budget next year. Those are tough cuts to deal with at any time, let alone in these kind of economic times.”
She said the tough economy certainly is playing a role in the flat property tax collections.
“We’re just going to have to figure out the best ways to deal with this,” she said. “The funding changes from the state are a game-changer.”
Council officials said they would start have to start budget discussions quickly to start coming to grips with the issues.
Current Finance Committee Chairman Paul Koomar said given the presentation by Sutherland, he wants to convene a meeting of the budget committee as quickly as possible to begin discussions, saying he would like to meet later this week or early next week. Koomar, who is running unopposed to succeed Brian Cruse as council president, said they would be looking for ways to deal with the financial issues.
As part of the discussions, Cruse said he was getting the sense from his fellow council members that they wanted to leave some options open when it comes to the animal control officer position. Council delayed voting on legislation which would effectively eliminate the position from the city books. Council and the administration laid off the former animal control officer this summer as part of budget-cutting measures. The move prompted protests from some residents, who expressed concerns about shifting much of the responsibility to Cuyahoga County.
Cruse said perhaps council should leave language in the ordinances intact which would give the city the ability to put a city animal control officer back in place at another time if it decides it wants one again. Councilman-at-Large Dwight Clark said that decision should be made within the totality of the entire budget and the financial issues the city is facing.
Using the reserve fund has been a source of contention between Sutherland’s administration, members of council and some members of the public in previous years. Sutherland has proposed utilizing it several times in the last few years, citing the poor economy. However, council and some members of the public have questioned it, saying they do not want to deplete the fund and lose potential interest income from investments made from the fund. After nixing it previously, council did approve taking several hundred thousand from the fund in the 2011 budget.
“It’s not an easy choice to make, but we’ve been cutting services and making changes where we could,” Sutherland said.
She said $750,000 is the equivalent of seven-and-a-half full-time jobs.
“We’re already lean on staff, I don’t think we want to be laying off seven-and-a-half positions,” she said. “I’m of the belief that we should take a moderate approach and use the reserve fund for much of it and look to find cuts where can throughout the rest of the budget.”
She said in going over the budget, council would have consider decisions such as staff or service cuts, using the reserve fund and other potential changes.
“It’s just not going to be easy,” she said.