MUNROE FALLS -- Despite a tight budget and a stated need to ask voters for tax increases in May, city officials say there is justification in giving city employees a pay raise.
City Council gave first reading to 2017's approximately $4.4-million permanent budget appropriations resolution Feb. 21. This puts Council on a schedule to give second and third readings on March 7 and 21 respectively. Under state law, the permanent budget must be approved by March 31. In the meantime, the city is operating with a temporary budget.
City officials had warned that the budget would be tight, which is why the city is placing two issues on the May 2 ballot, including an increase in the city's income tax rate from 2 percent to 2.25 percent and a 2.8-mill police levy. Voters rejected both issues when they were on the ballot in November, but did approve a 2-mill capital improvements levy for road work.
Mayor James Armstrong told Council during a Feb. 14 budget workshop that in putting together the budget, he had asked department heads to only request what they could not do without.
"I asked all the chiefs and directors to be able to honestly tell everybody they can't [operate] for less. That was the criteria, they can't do it for less," he said.
Finance Director Karen Reynolds said among the things not in the budget was pay increases for employees.
"They payroll is assuming zero raises," she said.
However, after Councilor Jenny Markovich said she wanted all city non-elected employees to be given a 2 percent pay increase, it was included.
"Nobody's had a raise in, I don't know how long, a long time," said Markovich. "I don't know where we're going to get it, but put in a 2 percent increase for people who have been here and really giving their all."
Reynolds told the Stow Sentry Feb. 22 that the raises were added to the version of the budget Council gave first reading to.
Council President Steve Stahl estimated the increase would add about $40,000, maybe a little more, to the budget. The income tax hike, if approved, would bring an additional $276,000 per year and the police levy would bring around $300,000 more.
"I have no problem telling our residents these people haven't had a raise in six years or however many years," he said, adding that he believes not giving the raise would not make a significant difference.
He said leaving the raises out would not make a significant difference in the budget.
"I don't think we should continue to penalize our employees that are working hard and have dedicated themselves extremely well," said Stahl.
Councilor Mike Barnes said residents have "become accustomed to a level of service. I'm not sure they know how big of a bargain it is, but it is a bargain."
Armstrong suggested that perhaps a pay raise could be given retroactive to the start of the year if the levies pass.
"Should people provide us with sufficient funds to operate the city, I do think the staff should be taken into account because they have sacrificed as well over a number of years," he said.
Councilor Jim Iona said he agrees, adding he is concerned that if a raise is given before the May election, it could lead to a perception that the city does not really need the money.
"I guess I'm just looking at the big picture," he said. "I think [the employees] deserve it, no doubt."
Stahl, however, said if raises were held off until after the elections, assuming voters approve the tax issues, it could appear that city officials were being deceptive about the need for the money.
"I would rather be upfront and whether the people accept this, I don't know -- but six years without a raise, folks," he said.
Barnes said, "I think the better story is to say, 'Look, we know we're facing really hard times, but the people who work here we need to keep here. Two percent is 40,000 bucks. It's well worth it and when we look you in the eyes talking about the money and if you want to keep the service you've had, this is what we have to do.'"
General fund is a concern
City officials say that the general fund, the city's primary fund, is the biggest concern because its cash reserves, a cushion of money not spent at the end of the year, is dropping.
The $4.4 million in proposed appropriations for this year is well below the $5.7 million in last year's appropriations. However, according to actual expenditure figures, only about $3.74 million was spent in 2016.
The general fund is projected to have nearly $3.1 million available in it this year, of which a little over $2.06 million is appropriated in a large number of line items and a little over $1.03 million is projected as a carryover balance at the end of the year.
By comparison, about $1.86 million was actually spent in 2016 out of the general fund, with about $1.36 million left over at the end of the year. The general fund's cash reserves were at about $1.9 million as little as two years ago.
The general fund receives funding, projected at about $1.74 million this year, from a number of sources, but the primary one is local income tax. The city is projected to receive about $1.24 million is year, a little more than the nearly $1.22 million received in 2016.
The biggest expense in the general fund is the police department's operating budget, nearly $1.06 million appropriated for 2017, about $35,000 higher than what was spent in 2016. Much of this cost increase can be accounted for by an approximately $25,000 increase in salaries, benefits and other personnel costs, from about $871,000 spent in 2016 to about $896,000 appropriated for this year.
Another notable fund is the street construction, maintenance and repair funds.
In the former, about $205,000 is appropriated for this year, up from about $172,000 spent in 2016. But the biggest change is on the revenue side, with about $430,000 projected for this year, nearly double the approximately $216,000 taken in last year.
The total is entirely attributable to the new capital improvement levy money, about $214,000, that is expected to be received this year.
City officials have said that because receipts of levy funds are always six months behind collections, they only expected to get half that amount this year, all in the second half of the year. Reynolds, however, told Council Feb. 14 that Summit County is giving the city an advance.
"So we'll realize the entire $214,000 this year, which is really great," she said.
The street fund ended 2016 with a nearly $134,000 balance and is projected to end this year with almost $360,000.
The city's newly hired engineering firm, GPD Group, recently completed a study of city roads and Armstrong has said the plan is to do engineering work this year and do what road work it can next year, possibly with the addition of state grants.
Stahl said he appreciated the administration's efforts in developing the budget.
"It's not the kind of budget anyone wants to put together because it's bare bones, but it is what it is. It's still a deficit. We cannot continue to go down this path," he said.
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