The Tipp City Council is nearing completion of the 2010 budget, and its final vote is set for the next 2 meetings this December. The budget process is comprised of the City’s 5-year Capital Improvement Program and the General Fund’s operating budget. The Capital Improvement Program is a 5-year plan where big purchases of items such as police cars and park lawn mowers are made. It also includes street maintenance and repairs. The Capital Improvement Program has a budget of approximately $3 million dollars. The General Fund pays for employee salaries, and other efforts at operating the government in general. This has a total of about $6 million dollars, and comes primarily from income taxes. The City’s budget process requires council (and the citizens) to know what money is coming in, and what money is going out. According to the finance department at City Hall, the money that is coming in is way down.
By this time of year, the budget process is usually completed. However, the 2010 budget is unique because of the poor economy and as a result the City must take a closer look at the money situation. With businesses closing or laying off people, there are less citizens who are employed that pay income taxes to the City. As a result, the tax receipts that are coming in are way down. Additionally, due to the massive amount of bank foreclosures throughout the country, people are not paying property taxes either and this is another source of revenue that normally flows into the budget of Tipp City. It too, is way down. The City also benefits from the income gained from the profits made from businesses inside the City limits. As businesses struggle, profits are either way down or don’t exist for 2009. As a result, the city is in a tight financial situation, and actually faces a possible deficit this year. If spending levels do not change, and trends continue, the City of Tipp City will spend more money in 2010 than it takes in. Word among the council members is that the 2009 budget may be already running in the red. The most up-to-date figures, as of this writing, are not available. However, City Council addressed the budget concerns in several public meetings over the past few months. These included a Town Hall Meeting, the Capital Improvement Plan Workshop, several city council meetings over the fall and winter. One suggestion to raise revenues was to increase the City’s local income tax credit, which would raise taxes on 60% of residents who work outside of the City. These people would pay local taxes at both where they work and to Tipp City.
The City Council had several options. They could have simply accepted the City Staff’s initial proposal which called for modest spending increases from those levels as adjusted in 2009. This, however, would mean no new street improvements, and the running of a potential deficit by the end of the year. Another proposal entailed eliminating the City’s local income tax credit. This met with strong public and political opposition. A third is to implement some modest cuts, and then place a levy on the ballot. This too is fairly unpopular in these tough economic times. Another proposal involved waiting until the parks levy expired in 2012 and trying then for a “replacement” type of levy. As popular as this might sound, any money this generates would be 3 years away at best.
Regardless of how the City raises the money, a consensus was reached that some capital improvements had to be made now. No street improvements have been made in Tipp City in 2 years without Federal funding, and two streets have gotten so bad that they require immediate attention. Hartman Avenue needs resurfacing and water main work so the city could do two projects at once there (fixing the water issues and then resurfacing the street). Horton Avenue has gotten so deteriorated that immediate action must be taken now in order to avoid having to “dig down deep” into the street, and costing even more. No work has been done on Horton at all in recent memory.
With these two projects costing about $300,000.00 total, Council decided to make cuts in the City’s general fund in order to pay for these two projects. It directed City Manager Jon Crusey to go back and make cuts ranging from $200,000.00 to $300,000.00 in 2010. After meeting with city employees, department heads, and other interested parties, City Staff came up with two sets of cuts, one totaling about $200,000, and another amounting to $300,000.00.
The proposal for $200,000.00 included line-item cuts in just about every department, and some realignment of department personnel. Some capital purchases such as city vehicles, and law mowers would also be pushed back to later years
The $300,000.00 proposal included all the $200,000.00 items, but also called for a 2.5% pay cut across the board for all City employees, police and fire included. It also included canceling the July 4th fireworks display, and possibly laying off personnel. The pay cuts would have to be approved by the FOP in addition to the other unions with contracts with the City. In June of 2009 the City agreed to a contract with the FOP which included a pay raise for the police in the amount of 2.5% this year, 2% next year, and 3% the year after. The City budget for the Police includes 19 officers, and allots over 1.3 million dollars for salaries. This will cost nearly $100,000 over the next 3 years (starting with 2009).
After their most-recent executive session and study session on Monday, December 7, 2009, council appears to have tentatively put together a budget that allows for some cuts, and yet still affords to do the street work on Hartman and Horton. The council also appears to be leaning towards no pay cuts for city staff or police/fire, and maintaining salary levels as proposed in the 2010 budget initially. There also appears to be no lay-offs in the works, but rather make cuts through retirement/attrition, and departmental merging, and realignments.
No member of council wanted to comment on future sources of revenue or whether a new tax levy was necessary in the near future. Similarly, none of the sitting council members commented on the reduction of the local tax credit, which is still on the agenda for the December 21st 2009 meeting. This could still be voted-in by current council members.
Interestingly, the City of Tipp City does have a savings account, and “rainy day fund” where the City has invested money in better times. It is noted to have a balance of over a million dollars. As of this writing, no calls were made to tap into this fund in order to avoid lay-offs, pay cuts, or new taxes.
Current council members deserve some credit here. It would have been easy to simply rubber stamp the City Staff’s original 2010 budget, and simply pass the problem along to the incoming council next year. This seems to be the trend at all levels of government these days. However outgoing members Tim Evans, Vickie Blakey and Bill Beagle, along with remaining members George Lovett, Dee Gillis, and John Kessler & Pat Hale addressed the issue with some tough choices. Some cuts will not be popular: keeping the pool open for a shorter season, doing away with fireworks or snow clearing in some areas, lay-offs, or cuts in services. Whatever the final result, the current council did make some tough choices, and City Staff did make some difficult cuts in order to get a budget that is not covered in red ink, and still allows for street improvements to some extent. It is hard to say what motivated the current council to act now, and be so fiscally conservative. Some say it was all the election rhetoric about cuts. Others cite public outcry over raising taxes before implementing huge and painful cuts. Still others maintain it was simple economics. Either way, it beats the incoming council-elect members to the punch in being fiscally conservative. Just how this will be received in the eyes of the citizens has yet to be seen. Stay tuned.
