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Budget drain receives trustees' attention
(by Joan Demirjian - February 03, 2010)
Budget drain receives trustees' attention
By JOAN DEMIRJIAN
Bainbridge Trustees are taking an in-depth look at how to decrease operating costs of the township. They met in a work session Jan. 30 to discuss the issues in preparation for implementing a budget for the general fund.
Trustee Lorrie Benza said the township needs to be vigilant on the money coming in and going out.
So far, the township has had the luxury of a nice monetary cushion, she said of its estate-tax investment fund. "We're not in trouble as long as we are aware of the monetary issues," she said.
Trustees will look at what can be trimmed from the general fund, Trustee Jeff Markley said. "We're promoting efficiencies in all the operations funded by the general fund in order to meet our budget."
Operations supported by the general fund include parks and properties, administration of Town Hall, recycling, the fiscal officer's operations, zoning, office supplies, negotiations with unions, cemeteries and public events. Anything not involving the police, fire or road departments is under the general fund.
Trustee Matt Lynch said he hopes to identify where the revenue is down and then address it. "We should have an understanding of where to cut costs." He said it's unclear where the deficit is.
In looking at the budget, the general fund, supported by recurring income, expenses exceeded incoming funds, Mr. Markley said. "That is a problem."
For 2009, the recurring expenses for the general fund were $1.3 million, but recurring income was $1.2 million. The overage was paid with money from the township's investment funds.
Recurring income is derived from property taxes, while nonrecurring income includes estate taxes, which cannot be predicted each year.
Recurring income for the general fund is paying for daily operations while nonrecurring funds pay for specific projects, including capital improvements.
Five-year plans guide township departments and now such a plan is needed for the general fund operations, Mr. Markley said. They will establish a budget and what operations are critical to the township will have to be determined, he said.
In the nonrecurring fund category, the township expenses exceeded the fund's income by $717,000. However, the Geauga County Auditor's Office and Geauga County budget commission have urged the township to spend down those funds derived from interest and estate taxes.
The township has been using estate taxes to cover shortfalls in the general-fund operations, Mr. Markley said.
If they do not ensure they are operating within the available recurring income, he said, "We're going to be in a world of hurt." He cited the current financial problems in communities such as the city of Pepper Pike.
"The township's general-fund income is a limited source and is diminishing," he said. He cited factors such as the economy, people not paying property taxes and foreclosures.
"The general fund has to be flexible enough to withstand fluctuating conditions," Mr. Markley said.
"We should also understand where we can increase revenues," he said. Charging more for use of township facilities, finding grants for projects and using capital-improvement money to find ways to reduce operating costs are some possibilities, Mr. Markley said.
A portion of the inside, unvoted 3 mills the township receives from the county funneled through the state goes to the general fund. The township can count on the inside millage, along with gas taxes and license fees.
Funds from a joint economic development district with the city of Solon and Marketplace shopping center also is currently considered recurring income and the money goes into the general fund.
"We should be able to manage operations with recurring income," Mr. Markley said. "And we have to manage these expenses."
Mr. Lynch said he has long thought that nonrecurring income, such as estate tax revenue should be used for special projects, like the July Fourth event and some capital improvements so as not to burden the general-fund operating funds.
Mr. Markley said, in 2009, the township spent $1.4 million of nonrecurring funds on information technology program, demolition of Bainbridge School, a Town Hall renovation project and other work.
During the year, the township took in $400,000 in interest on the investment funds and $295,000 in estate taxes, so the investment money is being spent down as desired by the Geauga County Auditor's Office, he said.
"We need to work through the decision-making process now," Mr. Markley said of a proposed budget. "Some things are priorities and some are not."
Mr. Lynch said he sees a need for a work session reviewing the actual recurring expenses and recurring income, "so we know where we are in relation to a deficit, if any." They should also prioritize the general fund, he said.
"This board has had disagreements," Mr. Lynch said. However, he commended the board of trustees for the work session. "I think this is a good exercise," he said.
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