Cuyahoga Falls -- With another budget process under its belt, city leaders continue to try to weather the ongoing financial challenges they are facing.
The city's finance director said Falls leaders are attempting to deal with a downturn in the economy and state budget reductions.
"Not one time in at least the last 20 years have both of these factors happened together," said Cuyahoga Falls Finance Director Joseph Brodzinski.
City Council on Dec. 27 approved a $176.29 million budget for 2013. The overall 2012 budget ended up being $165.39 million, lower than the $171.1 million that was planned for 2012.
The 2012 budget ended up lower due to some major projects not being done such as the removal of the dams, and a sanitary sewer overflow project with the EPA, said Scott Fitzsimmons, the city's deputy finance director. He added the amount that was spent on electric department expenses also was lower than expected in 2012.
The general fund budget for 2013 is $32.31 million. In 2012, the general fund budget was $32.53 million.
The city is expected to spend $1.9 million more than it will bring in during 2013, according to Brodzinski.
Fitzsimmons on Jan. 3 said that the city's 2012 general fund balance that will be carried over to 2013 "will not be known for a few days," but added the amount would cover the $1.9 million difference. The city is expected to have a carryover of $5.53 million at the end of 2013, according to Brodzinski.
Due to reductions to the commercial activity tax, local government funds and estate taxes from the state, the city is projecting $2.1 million less in revenue for 2013 than it received in 2010, according to Brodzinski. He added that incoming property tax revenue is projected to be $633,000 less in 2013 than the city received in 2010.
The tough economy has also affected the amount of money the city receives from interest on investments. In 2001, the city collected more than $2.5 million from that source and while that figure dropped to $916,000 in 2002, the revenue "slowly increased through 2007, and then crashed again due to a downturn in the economy."
In 2012 that revenue will be about $200,000, according to the finance director. Fitzsimmons said that $150,000 has been budgeted for that revenue source in 2013.
Brodzinski said that, in the past, a "substantial chunk" of the investment revenue was to help pay for the street department's snow removal program.
"The lack of investment income due to the economy has caused the city to transfer over $3.2 million, since 2009, from the general fund to the street fund to assist with snow removal and road repairs," said Brodzinski. "In the past, zero was required from the general fund, because we earned enough investment income to assist."
To deal with less revenue coming in from various sources, the city has tightened its belt.
"Some communities have reduced their capital infrastructure spends to balance their budgets " said Brodzinski. "We position ourselves to handle the downturns in the economy by watching how much we spend. This way, the city does not sell out its capital infrastructure for the future to survive today's current spending."
Whenever a job at city hall is open, Brodzinski said officials review the position.
"Jobs have been eliminated, reduced to part-time positions, or combined with other positions," he said. "These moves in personnel has saved the city well over $7 million over the years. As future jobs become vacant we will continue to review each position as to need."
"While most cities, as a result of the ongoing global recession, are entering their third, or in some cases fourth year of austerity, in Cuyahoga Falls, we are now entering our eighth year of austerity budgeting," said Mayor Don L. Robart. "Being ahead of the curve has allowed us to end the last three years (2010, 2011 and 2012) with the highest general fund balance in the city's history. We will continue to apply this fiscally conservative approach until we see a significant surge in the economy. Fortunately, through a well-thought out, cost-cutting strategy, we have been able to sacrifice, consolidate, and otherwise eliminate without any significant loss in service."
When asked by the Falls News-Press, Brodzinski said city officials are not considering raising the income tax rate to generate more revenue.
"In these tough economic times, the last thing we would want to do would be to increase the tax rate so that as a local government we could continue to spend," said Brodzinski. "As of right now and for the foreseeable future we will not increase the income tax rate."
The city's income tax rate is currently 2 percent. The last rate increase occurred when the rate went up from 1.5 percent to 2 percent in 1996, according to Fitzsimmons.