NORTH ROYALTON – Council began discussing the 2015 budget in depth at a special finance meeting Nov. 10
This budget, like the 2014 version, is described as a no fluff, no frills budget that strives to preserve the $1 million carryover the city has worked hard to build.
State cuts, elimination of the estate tax, and an extra pay period make it a bit challenging, but officials say it is doable thanks to fiscal preparedness of the proceeding years.
Finance Director Eric Dean and Mayor Bob Stefanik are again erring on the frugal side, projecting income tax collections down slightly, at $75,000 less than 2014.
The main expenditure next year is the road program, earmarked for $720,540.
Over at the police department, two patrolmen will be hired to offset future retirements. Police have also requested $120,000 in vehicles.
Fire will be granted $12,500 to continue hydrant paintings next summer, $20,000 for vehicles, $93,000 for equipment and $120,000 for needed repairs at both stations.
Finance is spending $45,000 to outsource payroll but that expense is being offset by fewer employees.
State cuts have been a tough blow to the city bank account in recent years and that’s evident even now.
On average, the city was receiving $630,000 in municipal aid from the state and county combined. In 2013, that number plummeted to just $62,000. It rebounded a bit this year at $250,000, and the state projects $305,000, next year. The city’s not holding its breath.
Another hit has been the estate tax. The city was receiving $500,000 on average. This year, it was just $221,455. Nothing is expected next year.
“There’s not any fluff in this budget, as we continue to feel the effects of the significant cuts in local government funding,” Stefanik said. “Knowing the track record of the people we sent to Columbus, I don’t expect any reversals to the local government cuts we’ve experienced the previous four years.”
The city is striving to maintain the $1 million cash carryover by holding in the spending reins. Preserving this balance gives the city a better credit score, essentially, which equates to better financial standings and interest rates. Royalton also enjoys a future capital improvement fund, referred to by some as the rainy day fund, of $2.5 million.
Aside from the cuts, leaders must deal with a bit of an anomaly next year. Every 11 years, cities experience a 27th pay period for hourly employees. It will cost an additional $450,000 in payroll.
Back in 2010, the city began setting aside a portion, approximately $100,000 annually, of the $400,000 in cable franchise fees it receives to save for retirements. That fund, the accrued balance, now has approximately $650,000.
Council agreed at the finance meeting, per a recommendation by Dean, to move $450,000 of this into the general fund next year to offset this odd expenditure and avoid dipping into the carryover. That will leave the accrued fund with a balance of $300,000 that Dean said will more than cover any retirements, should they arise next year.
Typically the $400,000 in cable franchise fees is divided as follows – 50 percent, or $200,000, to future capital; 25 percent, or $100,000, to future retirements; 15 percent, or $60,000, to service to fund vehicles; and 10 percent, or $40,000, to the YMCA capital fund, as the city owns that property.
Because the city has been hit hard with lost state revenue, Dean proposed moving the entire $200,000, that’s feeding future capital, into the general fund as another cushion to preserve the $1 million carryover the city projects carrying into 2016.
With the new city hall open, officials do not foresee the need for any future buildings, thereby posing the argument that this money could be diverted temporarily while the economy’s dust continues to settle.
Ward 5 Councilman Steve Muller suggested only moving half that amount, $100,000, so the fund continues to build.
“Just in case there is a major expenditure or a shortfall in revenue,” he said.
Stefanik said he had felt the same but wanted to present the full $200,000 recommendation to gauge council’s thoughts.
Ward 4 Councilman Paul Marnecheck, a member of finance, Ward 6 Councilman Dan Kasaris and Ward 3 Councilman Dan Langshaw were a bit more supportive of Dean’s original recommendation to use the full $200,000. Council will mull it over more at the next budget talk, the regular finance committee meeting scheduled for 6 p.m. Nov. 18 at city hall, 14600 State Road. No matter what’s decided, money can be moved at any time with council approval.
Ward 1 Councilman John Nickell broached the topic of consolidation, specifically animal control, as a way to offset cuts. The city entertained the idea last year with Broadview Heights but talks were ended by them.
“It needs to be outsourced or something done,” Nickell said.
Stefanik said he is still exploring avenues, where possible, to combine services with neighboring communities to control costs.
“It takes somebody like a North Royalton who is willing to stick their toes in the water first when it comes to sharing services, and I think we’ve proven to do that in the past with the YMCA, dispatch, the communications agreement with the city of Cleveland, Strongsville, Brook Park,” Stefanik said. “I’d love to look at animal control. We do share a building inspector with Broadview. I’d like to expand on that if the opportunity arises.”
Langshaw said after the meeting, it’s obvious state cuts are extremely weighty and are playing a lead role in how the city has been budgeting and will continue to into the unforeseeable future.
“Since 2011, the cuts by the state to our city amount to a cumulative loss in revenue of $3.8 million. I hope the Ohio General Assembly and the newly re-elected Gov. John Kasich start paying attention to this issue and do more to help local governments like ours,” he said.
In the meantime, the city will hold tight the reins in this and future budgets, which will maintain the city’s firm financial footing.
“We were told by Columbus years ago that cuts were coming. We took it seriously and adjusted before cuts came. Maybe the average resident didn’t see it, but we’re victims of our own success. We outsourced engineering my first two months as mayor saving us money, we outsourced EMS billing, payroll, dispatch, trash, we didn’t hire as people retired and now we are down 40 full-time positions,” he said. “We took state cuts seriously and are ahead of the curve and prepared.”