HUDSON — Thanks to a better than expected end-of-the year fund balance and new revenue from a land sale, the city will no longer have to do a bond issue to help pay for road projects.
City Council had previously discussed implementing a 10-year, $2.3 million bond issue to help pay for road work, but the additional available revenue means the bond measure will no longer be needed, according to city spokesperson Jody Roberts.
Roberts noted the city’s ending general fund balance in 2019 was nearly $1.15 million higher than what was projected in the middle of the year. Council on Jan. 21 had a first reading of legislation that would put that $1.15 million into this year’s concrete overlay program.
The city will also receive $1.1 million from the sale of a 45-acre parcel on Boston Mills Road and W. Executive Parkway approved by council on Jan. 21. In conjunction with that approval, council agreed to put the sale money toward road projects in 2021, said Roberts.
The combination of the $1.1 million land sale money and the additional $1.15 million of 2019 revenue "totals nearly the $2.3 million we originally planned to finance over the next few years," said Roberts. "Therefore we will not need to bond out that money."
This year the city is now planning to spend: $2.2 million in its reconstruction/resurfacing program; $1.15 million in its concrete overlay program; $180,000 in its striping program; $125,000 in its concrete program; $100,000 in its asphalt patching program; and $95,000 in its crack sealing program.
Specifically, the city will spend $450,000 on construction management for the state Route 91 turn lane project, $200,000 on design work for adaptive signals for downtown, $90,000 for College Street and Hudson Street crosswalk enhancements, $75,000 for the final design for the S. Main Street project from Barlow Road to Veterans Way, and $75,000 for Blackberry Bridge Wingwall repair.
A look at the numbers
Income tax collection increased from nearly $23.7 million in 2018 to $25.9 million in 2019 (a 9.4% increase), said Roberts. She added the increase in revenues is due primarily to a better local economy, the city’s business attraction and expansion efforts, and fiscally responsible financial management and conservative budgeting.
City staff made efforts to reduce health care costs by choosing a different insurer for 2020, which decreased the city’s health care expenses by 5.1%.
Overall anticipated expenses for 2020 are $78.67 million and overall expected revenues are $76.26 million, said Roberts, who noted the higher expense level is mainly due to a "one-time capital [improvement] project in Hudson Public Power that is budgeted for in Hudson Public Power, will be paid for by [the] Hudson Public Power Fund and does not impact … the general fund numbers."
Roberts noted the Hudson Public Power Fund is funded by customers’ electric bill payments.
"The other funds manage themselves as far as they’re staying afloat on their own and we’re not subsidizing them," said Roberts. "They’re not losing money … [Those funds] will go up and down depending on those big capital projects."
She added the city is focused on the general fund, which has projected revenues exceeding projected expenses.
The general fund revenues in 2020 are projected at nearly $24.1 million, while general fund expenses for this year are anticipated at about $23.94 million. In addition, the general fund ended 2019 with a carryover of $9.4 million and is expected to finish 2020 with a carryover of $9.7 million.
"We’re still in a strong financial position," said Roberts.
Council directed the administration to maintain a carryover in the general fund that is 40% of all general fund budgeted expenses. During the past few years, council added money for items such as roads, business broadband, and Downtown Phase II. These additional investments were made with the goal of not dropping the carryover to lower than 30%, which Roberts said is "a higher carryover than most cities in the state."
Despite these investments, Roberts said the carryover never dipped below 30% and is climbing back up closer to 40%. The carryover is now at 38%, but after more money goes into road projects, the 2019 carryover will be 34%.
Finance Director: City in ‘sound’ fiscal condition
"The city’s in sound financial condition," said Finance Director Jeff Knoblauch. "We continue to maintain our AAA credit rating, which is analyzed continuously by the rating agencies. We continue to get clean audits, and get the Auditor of State award for that."
The AAA rating allows the city to borrow money at the lowest interest rates possible. That rating allowed Hudson to borrow at an interest rate of 1.28% in 2019, the lowest rate of any city in Ohio, according to Knoblauch.
Knoblauch added that the city uses the Regional Income Tax Agency (RITA) for collection of income tax funds and praised the work of RITA — which he said invests a lot of money into technology— for keeping collection costs low.
He said the city was in a "good position, not a great position" regarding its debt ratio. He said the city’s annual debt service payments will decline by about $1 million by 2024. Knoblauch credited council, staff and the city manager for working on long—range financial planning. Roberts added that all voted debt levies have expired and the debt is paid off. Final payment on the Hudson Library building was made in 2019.