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Layoffs loom as Pepper Pike faces tight budget
(by Sali McSherry - January 28, 2010)
Layoffs loom as Pepper Pike faces tight budget
By SALI McSHERRY
Pepper Pike Mayor Bruce H. Akers delivered sobering news about the city's 2010 budget at last week's City Council meeting.
With the threat of a financial deficit, the city will have to make tough decisions over whether to lay off personnel, require forced unpaid furloughs, reduce or charge for some services and increase the income tax, Mr. Akers said.
There won't be a road maintenance and reconstruction program this year, he said. The city typically spends between $600,000 and $700,000 annually, Mr. Akers said.
The city had a 26 percent decline in revenue in 2009, Finance Director Prashant Shah said, due to declines in inheritance taxes, 8 percent in income taxes and 5 percent in property taxes.
Inheritance-tax revenue, which averages $1.8 million a year, dropped to $434,000, Mr. Shah said. Typically, $500,000 is budgeted, he said.
Mr. Akers appointed council members Gail Mayland and Frederick Taft to chair and Councilman Allan Krulak to be a member of a long-range strategic plan committee that will begin meeting in February. The mayor said he will appoint a committee comprised of a cross section of citizens.
Pepper Pike started last year with a $4.3 million surplus and ended the year with $835,000, Mr. Shah said. The city has not seen anything like that scenario in the past 20 years, he said. Expenditures were up the typical 3 percent last year, he said.
About 65 percent to 70 percent of the city's $10 million budget is allocated for employee salaries and benefits, Mr. Akers said, and the budget will not be done until labor negotiations are completed with the police department. The result of those negotiations will determine salaries and benefits for the rest of the city's employees, he said. The city has until March 31 to approve a budget.
Estimated expenditures are about $6.5 million for payroll, including pensions and pickups, in which the city pays a portion of the employee contributions, at about $5.6 million, health care at about $1 million and workers' compensation at $150,000. Revenue is estimated at about $7 million, Mr. Shah said. That leaves about $520,000 left for expenditures, he said, such as insurance, maintenance, fuel, utilities, salt, supplies, training and other contractual services.
The fire department, which relies on a fire levy, is estimated to spend about $2.3 million on payroll, including pensions and pickups, as well as health care. Estimated revenue for the levy is $1.65 million. That means a deficit of about $673,000, Mr. Shah said. Typically, the city pays additional expenses for the fire department through the general fund, he said.
The city will look at overtime costs, and may need to drop its deer-culling program, including the annual aerial fly that determines the approximate number of deer; the publishing of the Pepper Pike Post community newsletter; and the ice-cream social.
Mr. Akers said there will be no pay increases in the contracts with the city engineer and law director. All training will be curtailed, except when absolutely necessary, he said.
All purchases will need to be approved by the finance director, Mr. Akers said, and they both will meet with department heads to discuss the possibility of doing without some positions. The city will consider merging services with other communities, he said.
Pepper Pike, which has been given the Aa1 rating consecutively over the last nine years by Moody's Investors Service, is one-third of the population of other municipalities in Ohio with the same rating, Mr. Shah said. While there was a cautionary note attached to just about every entity rated this past year, he said, if the city takes the right steps, it will be able to retain the high rating.
In 2009, the city deferred several projects totaling about $650,000 and with the advent of the new rubbish collection plan using scooters, the city will save about $400,000 this year in the sanitation department. Two employees have taken early buyouts and they will not be replaced, which will save the city about $100,000 per year, effective 2011.
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