[ back ]
Chardon finances weather economic storm
(by Joseph Koziol Jr. - March 04, 2009)
Chardon finances weather economic storm
By JOSEPH KOZIOL JR.
The City of Chardon is holding its own in today's faltering economy.
That was the overall message painted last week by city administrators as City Council began its review of the 2009 budget.
"Overall, the city is adequately weathering this economic storm everybody's facing," City Manager David Lelko said. "We're not flourishing, but we're also not floundering. But we do need to be careful as we go into this year and keep an especially sharp eye on our revenues."
In the city's general-fund budget, Mr. Lelko said the city has planned for $18.9 million in expenditures.
That may seem to contradict the estimated revenues for the coming year, which have been projected at $15.5 million, he said. "The quick look says, 'Oh my, they're $3 million over; this budget's in the red.'" The reality is the city has other funds that were not used in the past year and are expected to cover the apparent shortfall, he said.
Mr. Lelko compared the situation to a family that saved three years for an expensive vacation. He said the family's expenses will go up the year it actually takes the vacation.
This year, the city will be spending funds it saved by not spending them for certain projects previously planned. Among those projects, he said, is the Wilson Mills Road sewer project and work on Chardon Square.
He said the city always plans its revenues on the low side and expenditures on the high side. Inevitably, he said, the city always spends less than projected. Last year, he said, the city projected a year-end balance of $950,000, but ended with $2.4 million.
Councilman Philip King commended Mr. Lelko and Finance Director Jeffrey Smock for running a "very good financial ship."
Mr. Lelko said it also was the efforts of department heads and employees, who spend frugally. He said, a few years ago the city was seeing financial problems and reduced staffing. He said the city never replaced that staffing, allowing it to be a little better positioned in this economy.
Mr. Smock said the city also faces the loss of tangible personal property taxes that were phased out by the state. The tax covers such business items as machinery, equipment, furnishings and inventory. Although the city was being reimbursed, in part, for those losses in the past, those reimbursements are expected to stop in the next couple years.
Mr. Smock said he has also budgeted for a reduction in income-tax collections. He projected a $100,000 drop, although that is just a guess at this time, he said. He said while the city has not had any major business closings, he is unable to ascertain how many residents, who worked outside the city, may have lost their jobs in this economy. He said he and his staff plan closely to monitor the situation to ensure whether there will be a precipitous drop in income taxes this year.
The city will also likely see a drop in interest on investments. He projected interest receipts at about half of what the city received last year. He said the issue is "interest rate driven."
Council also will have to look at a fire levy for the November ballot, Mr. Smock said. He said the city is in the final year of a five-year, 4-mill fire levy. He said meeting with fire department officials will determine whether the city can renew the levy or would seek a larger one.
The city's general fund is also being tapped by almost a $1 million each year to pay off debt on a waste-water-treatment-plant expansion, the east-side sewer-trunk-line project and the water-treatment-plant construction. He said the sewer fund is proving to be the most challenging, as its revenues have failed to provide what is needed to pay that debt.
The sewer fund should provide $635,000 annually to pay its share of the debt, but has consistently fallen short with revenues of $70,000, $84,000 and $145,000, Mr. Smock said. He said that shortfall has been due mainly to the economic conditions. He said the city has seen a drop in fees charged to developers for new construction.
[ back ]
