NORTH ROYALTON – City income tax collections are beginning to reveal that last year’s unprecedented collections were a bit of fluke after this year’s receipts dipped in both May and now June. Though receipts are down somewhat when comparing them to 2013, overall, officials say the city is still in great financial shape.

May is typically the banner month for the city in terms of collections, but last month’s collections, when looking at 2013, were not so hot. A computer glitch that delayed collections at the Regional Income Tax Agency was blamed for the less than stellar receipts. Everyone anticipated that June’s collections would rebound once those collections were accounted for, but that did not happen, as June’s were down too.

Finance Director Eric Dean poured over the funds to find the culprit and found the issue.

His analysis is that last year’s record setting receipts were the result of a few businesses experiencing record profits that were taxable.

“And were not seeing that this year yet,” Dean said. “Having a year like last year is unrealistic. It was just a one-time anomaly.”

But that doesn’t mean this year’s collections are poor by any means.

Looking at this year to years past proves this.

Prior to 2013 collections, 2008 was the benchmark, record-setting year for North Royalton. That year the city’s net receipts were an astonishing $12.5 million, the highest ever up until that point.

Then, the economy tanked.

Receipts plummeted to $11.57 million in 2009 and finally $11 million in 2010 at the lowest point of the recession. The city made some tough decisions, and the economy began turning around, too. This combination found the city on sound financial footing again.

In 2011, receipts climbed to $11.8 million and then even higher to $12.5 million in 2012, tying with 2008 as the best year ever in terms of collections.

Then the city experienced the incredible high of 2013. Last year’s collections were a whopping $13.6 million, nearly $1.1 million more than the second record year’s.

Dean is projecting the city to end this year somewhere around $13.3 million, which is less than last year, yes, but still greater than 2008 and 2012 which were banner, benchmark years for the city before 2013 came along.

Throwing last year out of the mix as a fluke, and this year would have been considered record-setting.

Thankfully, the city had the wherewithal to bank last year’s surplus, which has afforded a nice cushion this year. The 2014 budget was still constructed relatively conservatively, though the city did spend close to $1 million on roads. The harsh winter and the May 12 storm both dug into that cushion a bit, but the city is working on acquiring state aid to recoup as much of the May 12 costs as possible.

City officials say the goal is to put back into next year’s budget anything that is dipped into this year.

“We’re cautiously looking to the end of year. We’ll be able to better respond as we get closer to the end of the year. We’ll adjust next year’s budget accordingly. It will be business as usual this year, and if adjustments need to be made next year, they’ll be made. But, we can’t react to something that hasn’t happened yet,” Mayor Bob Stefanik said referring to the rest of the year’s collections and how they will shake out.

The city’s collections are down just $135,000 versus what was projected for 2014.

“That’s not bad. Some of the money we put aside last year, we’ll probably use this year, but we will put that back into next year’s budget,” Dean said, agreeing with the mayor. “We are closely monitoring everything.”

Ward 1 Councilman John Nickell agrees that the city is still in good shape.

“We had very high net profit receipts last year that were unusual. This year compared to last year, we’re down but we’re still normal, still above where we were the last two years. We’ll keep an eye on expenses going forward,” he said.

The city’s two main sources of income – individual income taxes of residents and the income taxes of nonresidents who work in the city – are both holding steady, said Council President Larry Antoskiewicz, who chairs finance. He finds this reassuring.

“The businesses’ income taxes, that’s the one that’s down, and that is the smallest portion of our tax collections. These other two, they are the biggest forms of income, and they are staying steady. I think that’s a good thing,” he said.

The city will continue on with the projects planned this year like the mayor said, but the city likely won’t be adding any additional ones on. Like Nickell, Ward 3 Council Dan Langshaw remains confident.

“Although we are down some from last year’s revenues, I remain confident in our approach to be fiscally conservative. Also with the possibility of getting some funding from the state to help cover some of the costs the city incurred as a result of the May 12 storm, that will help give us a boost that we need. Most importantly, we are still able and on track to complete all the infrastructure projects and other priorities we have set for 2014 regardless of the current numbers,” he said.

All the things that have seemed minor in their savings here and there for the city the past few years have truly made a difference, the council president said, and contribute to the firm financial footing the city enjoys today.

“We will reevaluate things as we go, if we have to reevaluate the budget for next year, we’ll do that,” Antoskiewicz said. “But we’re doing good. We’re still holding our own. We still have a conservative budget and as we go on, we’ll continue to look at ways to save money as we have done – such as refinancing bonds, installing the new fiber network that will save on the phone system, working with our regional partners to save dollars on various projects. All these things add up and counteracts things like this.”

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