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Circleville City Finance Committee discusses $2.9 million budget cut and tax proposal

CIRCLEVILLE – On Tuesday night, the Circleville City Finance Committee met with the auditor and department heads to discuss a proposed budget cut of $2.9 million and a half percent tax levy which would raise $1.5 million for the police and fire departments. If approved by City Council, the tax levy would appear on a special election ballot on August 6th.

Who

In attendance of last night’s Circleville Finance Committee meeting were Finance Committee Chair Barry Keller, Council Members Todd Brady, Michelle Blanton, Tom Spring, Council President David Crawford, Clerk Linda Chancey, Auditor Gayle Spangler, Public Service Director Don Sherman, and Police Chief Shawn Baer.

Introduction

Spangler, the City Auditor, walked through proposed budget cuts from each fund and department that made up a $2.9 million proposed budget cut. We’ve attached the full text of the proposal which includes cuts from each department from most of the departments (except municipal court and city council). This is a draft proposal, and there was discussion about amending it before sending it on to council to correct 1 of the numbers. It cut one fund by $200k instead of the intended $20k.

How did the City get into a position where they need to cut $2.9 million from their budget, and how can the City cut that much from their budget and still provide essential services?

Keller, the Finance Committee Chair says, “In the case of police and fire, the safety fund, general fund, and capital, we budget and we have an income stream that has been flat or declining for years. If you spend more than you bring in, you eat up your cash reserves, and I think that’s what’s catching up to us. We’ve always had a carry over amount or a reserve. That’s dwindling down to next to nothing. So now we have to take drastic cuts.” This is similar to what the auditor said last week when asked about the cause of the deficit.

The city doesn’t know ahead of time what its exact revenue will be. For example, it doesn’t know exactly how much each person will make in income and as a result pay in taxes. Regional economics come into play as well, since a high unemployment or underemployment rate will result in lower tax revenue. It’s often the case that the City doesn’t know that it will be short of predictions until after the majority of their money has been collected. The City will often make adjustments to budgets throughout the year as they get a better idea of what actual revenue will be, but each quarter that they spend more than they bring in, it cuts into the City’s cash and investment balance. Keller and Spangler say that this has been occurring for several years, and it’s the primary reason for the drastic budget cut.

How can the city cut $2.9 million dollars, nearly %11.5 of its budget, and not have massive gaps in services. In some cases, city services will be degraded. In other cases, the city is pushing expenses into the future, cutting planned purchases, or correcting over-budgeting. A variety of these budget cutting techniques were used throughout the city budgets.

It’s important to note that funds from the general fund can be used to cover expenses of a specific purpose (roads, parks, safety, for example), but moneys in a special fund can’t be used to cover something more generic. For example, the city contributes $2.5 million from the general fund to prop up the safety fund, but funds from the safety fund can’t be used for other purposes, like roads or parks.

Cuts that will cause gaps in coverage

The fire department will be hit hardest in reducing existing coverage. Five part time employees will be laid off from the Fire Department and one currently active FireFighter will resign in June, reducing the current number of Firefighters available to provide service.

The police department currently has 3 open funded positions due to 1 retirement and 2 officers taking jobs in other cities. In addition to the open funded positions, they are currently 3 short of target staffing levels. The proposed budget cuts will funding for an additional 2 positions. Nobody will be laid off in that department because the positions are already vacant, but coverage will be impacted.

Police Chief Baer says, “The approved positions allotted by council are 21 police officers, 4 sergeants, 1 Chief, 7 Dispatchers. Currently we have 15 police officers, 4 sergeants, 1 Chief, and 5 dispatchers. Although we are approved to have these positions they are not all funded and that is where it can get confusing as the funding can change with the revenue as we are dealing with now. So when we are allowed to hire 1 extra police officer that will put us at 16 officers, still 5 short of our council approved strength.”

Cuts in budget that wasn’t going to be spent any way

There were several cuts in the utility department that weren’t going to be spent any way. Director Don Sherman says that some open positions have been open for a very long time, and they weren’t planning on filling them anyway. Cuts to these budgeted expenses will not cause a degradation of service and could be a considered a budget correction.

Borrowing from the future

Several budget cuts can be described as borrowing from the future. For example, many equipment and building maintenance funds were cut. The equipment and buildings are still going to degrade over time, and they will eventually need to be repaired or replaced. In fact, not maintaining some of these items will cause more money to be spent in the future. If a needed roof repair isn’t made, for example, that could cause water damage. In the future, they City would need to make the originally planned repairs to the roof and repair water damage.

Delaying purchases

Many of the proposed budget cuts are cutting out planned future purchases. These can cause a degradation of service if the purchases were meant to replace aging equipment. For example, the police department is going to hold off on purchasing 2 new cruisers, and the fire department will hold off on purchasing a replacement ambulance. The street crews are going to refrain from buying a piece of equipment that would making patching potholes quicker and cheaper. The HR department is going to hold off on buying a new piece of administrative software.

Just in case funds

Some budgets were cut that were set up for “just-in-case” purposes. Sherman mentioned a fund that’s generally used for making emergency repairs due to storm water drainage issues. He said that had they not made an emergency drainage repair last year, they could have lost parts of Route 56. Cuts in these funds may result in no consequence, if an emergency doesn’t come up. However, if one does, the city will need to react to the funding need by making cuts from somewhere else.

Acceptable degradation of service

One case where the city decided to make a sacrifice in quality of life is the funding of lighting at Ted Lewis park. It costs the city $8,000 per year to light Ted Lewis Park after dark, because they aren’t very efficient. Spangler said that the lights at Barthelmas are very inexpensive to run in contrast. Another area where the city is going to accept a lower level of service is in zoning enforcement.

Conclusion

Keller says that financial discipline and creative thinking are required to navigate through the difficult financial times. He says, “The department heads have to watch their budgets. Don’t overspend. Stay within your budget, and hopefully come in with some new revenue from either new jobs, economic development, or income tax collection. We need to get revenue up. One of the ways to get revenue up is we’re proposing a new tax levy. That half percent income tax increase will bring in a million and a half dollars specifically for our safety forces, police and fire. It’s not going to make us hire a whole bunch of people. It’s going to bring back the people that we’re not funding any more. We’re not buying police cars. We’re not buying fire trucks. It will allow us to do that again.”

Tom Spring, Councilman at large and Republican candidate for mayor, voiced some hesitation in sending a tax proposal to council. He says the city hasn’t done enough to look at alternative sources of funding for police and safety. He adds that if there is a tax sent to the public, it should be used for more proactive, revenue generating projects. Keller countered that the City is out of time and needs additional funding in order to avoid more cuts in the near future.

The budget cut and tax proposal will be sent to the whole City Council for discussion and consideration on March 19th.

Corrections and updates (3/8/2019): Sheri Theis was at the council meeting, but not present at the finance committee meeting. Human Resources Diretor Tony Chamberlain and Tom Spring were at the meeting. Replaced the term squad with an ambulance, as squad tends to refer to the people and ambulance more accurately refers to the vehicle. Changed “flooding and drainage” to “storm water drainage” to more accurately describe the fund. Added clarification of current police staff levels from Chief Baer.

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