Tallmadge -- The city administration's proposed budget for 2016 is about $30 million, slightly lower than the $32.4 million budget for 2015, and includes money for major capital projects, road work, city operations and employee wage increases.
Dr. Tom Pascarella, director of administration for the city, presented the proposed budget during a work session of City Council Nov. 16.
He said the smaller budget isn't reflective of any reductions of services to residents, but is a result of the timing of some major capital projects.
Council is expected to address legislation related to the proposed 2016 budget during its next committee meeting at 7 p.m. Dec. 7 at City Hall.
State law requires the city to adopt next year's budget by Dec. 31 of this year.
What's in the budget
According to Pascarella, the projected beginning balance of the general fund of the budget for next year is about $4.4 million. The projected ending balance is $4.39 million, which exceeds Council's minimum fund balance requirement of about $2.5 million.
The ending general fund balance for 2015 is about $4.7 million
Although projected revenues are $14,693,171, and expenditures are $14,693,970, Pascarella said the general fund is "in really sound financial shape. It's healthy."
"If you consider 'deficit spending' spending more than you bring in, then technically we're deficit spending by $799 in a $15 million budget [for the general fund] so we're comfortable with that," Pascarella told Council. He later elaborated the projected ending balance of the general fund provides more cushion for the overage.
The budget does not include any layoffs of city personnel.
Next year, the police department plans to hire one officer in addition to two or three replacements for officers who have been promoted, retired or left the department.
The additional position would most likely be a schools resource officer, Pascarella said. The police department and Tallmadge City Schools are discussing creating this position and how it could be funded.
Raises for employees, both union and nonunion, will impact the budget. Pascarella declined to disclose what amounts the city is figuring because negotiations are ongoing with the labor unions for the police officers, sergeants and firefighters.
The city has reached a tentative agreement with the Teamsters Local 436, which represents about 30 employees in the street, water, sewer and garage departments. The tentative agreement is expected to come before Council for approval before the end of the year.
All city employees received 2 percent wage increases in 2015.
Not included in the 2016 budget is the cost to build a new fire station, which the administration estimates at $6 million. The city might buy property next year, on which it would build the new fire station, according to Pascarella. The project might be in the 2017 budget, he said.
Pascarella identified the major challenges for next year as the financial health of the sanitary sewer fund, the cost of providing health insurance and benefits for employees, and the effect of future large capital projects' on the general fund.
"We have some very significant problems coming down the road financially. We need to get our arms around them in 2016," Pascarella said.
The sanitary sewer fund is continuing to take a hit from costs passed on by the city of Akron, and Pascarella recommends the city again increase rates to help cover the city's costs. The city increased sanitary sewer rates for some residents in 2014.
He recommends the city reach a fair and equitable rate schedule with Akron that accurately reflects Tallmadge's usage of the sanitary sewer system.
The increasing costs of providing medical benefits to employees through a traditional health care plan will continue to be a challenge so the city is considering alternatives, including switching to a self-insured plan or joining a consortium for better rates for self-insured plans. For medical benefits alone, excluding vision and dental, the city pays more than $1 million per year, Pascarella said.
The city's intention isn't to reduce health care coverage for employees, but rather to control costs, he said.
Although the city's health insurance rates are set for 2016, Pascarella recommends the city be proactive and address health care benefits for 2017.
"If we don't do something in 2016, we could have a considerable increase in 2017," he said.
Even though the general fund balance is in good shape, Pascarella said upcoming major capital projects will have a significant impact on future balances of the fund. He urges Council to implement a financial plan and debt strategy for 2017 and 2018 that takes these projects into account.
In addition to the regular annual streets program, major road construction projects for next year include improving the roadway and storm water system for North Avenue, which is about a $5.6 million project. The Ohio Department of Transportation will pay for $4.5 million of the project cost.
Next year's budget also includes $70,000 to rebuild the restrooms at Howe Road Park.
Pascarella also recommended the city create a financial plan for stormwater maintenance.
"We want to have a financial plan that makes sense so we can deal with it," he said.
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