MUNROE FALLS -- The city now has a budget for the year, but not the one city officials say they would have liked.
City Council at its March 21 meeting approved 6-0 an approximately $4.4-million permanent budget appropriations resolution for the year 2017. Councilor John Hegnauer was absent.
Under state law, the city had to approve the budget by the end of March. In the meantime, the city had been operating under a temporary budget.
Mayor James Armstrong told the Stow Sentry March 27 that the budget is much tighter one he would have liked to submit to Council.
"Our finances are limited so we're doing all that we can to provide the basic services," said Armstrong.
The city has placed 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.
The capital improvements levy is expected to generate about $214,000 annually. If approved, it is estimated that the income tax increase and the police levy would annually bring in about $276,000 and $300,000 respectively.
The budget does include a 2 percent pay increase for non-elected employees. City officials have said it is justified because employees had not received a pay increase for at least six years and it will only add a little over $40,000 to the budget this year.
City officials say the general fund, the city's primary fund, is the biggest concern because its cash reserves is dropping.
"Unfortunately, we're going to be relying on the reserve fund or, in other words, our savings account," said Armstrong, adding that this is the reason for the two May ballot issues.
"I'm hoping the citizens will support our city," he said.
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 for expenditures 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 in income taxes this 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.
Armstrong noted that earlier this year, the Ohio Auditor of State's office issued a "fiscal physical" report in connection with the city's 2015 audit. Out of 16 indicators the city was rated on, it received two critical, four cautionary and 10 positive rankings. Critical "signals a potential for high fiscal stress" and cautionary indicates a situation that is not as serious, but "of which the entity should be aware," according to the report, while positive indicates there are no concerns.
Indicators in which Munroe Falls was considered critical include an evaluation of operating deficits compared to the budget size and an evaluation of whether available revenue is enough to cover expenses. Armstrong said both can be summed up to mean the city needs more money.
"It's not like additional revenue is a want. It's a necessity," he said. "They can actually rely on the state auditor for that if anyone wants to think that there's not a necessity. I mean, the state auditor issued some very; four cautionary and two critical findings are not something any city wants to have pursuant to any audit."
A positive finding of the auditor's report is that the city is not considered, at least as of the end of 2015, to be in "fiscal distress."
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