{"id":84105,"date":"2017-02-06T09:15:50","date_gmt":"2017-02-06T14:15:50","guid":{"rendered":"https:\/\/thevwindependent.com\/news\/?p=84105"},"modified":"2017-02-07T08:48:24","modified_gmt":"2017-02-07T13:48:24","slug":"state-auditor-report-underscores-need-for-city-tax-hike","status":"publish","type":"post","link":"https:\/\/thevwindependent.com\/news\/2017\/02\/06\/state-auditor-report-underscores-need-for-city-tax-hike\/","title":{"rendered":"Auditor’s report supports city tax need"},"content":{"rendered":"

DAVE MOSIER<\/strong>\/independent editor<\/em><\/p>\n

The 2015 financial health indicators report on Van Wert recently released by Ohio Auditor of State David Yost underscores concerns city officials have about Van Wert\u2019s General Fund finances.<\/p>\n

\"The
The Van Wert Municipal Building needs work that has been delayed for years because of insufficient revenues<\/strong>. (VW independent file photo)<\/em><\/figcaption><\/figure>\n

The state-generated report identifies a municipality\u2019s fiscal practices and budgetary conditions that, if uncorrected, could result in the community being placed on fiscal watch or emergency. Out of the 15 indicators applicable to Van Wert, the city had two \u201ccritical outlook\u201d indicators and three \u201ccautionary outlook\u201d indicators. Critical outlooks signal a potentially high risk of fiscal stress, while cautionary outlooks are fiscal situations of which a municipality should be aware.<\/p>\n

Van Wert\u2019s critical outlooks came in indicators that looked whether revenues exceed expenditures and the percentage of general revenues to expenditures.<\/p>\n

In the first indicator, whether revenues exceed expenditures, a municipality is given a \u201ccritical outlook\u201d if it has an operating deficit of more than 5 percent. In 2014 and 2015, the city had an operating deficit of 6 percent, largely because the .22-percent Safety Capital Income Tax was used for capital expenditures, rather than for police and fire salaries and benefits, which was the case in other years since 2009.<\/p>\n

City Auditor Martha Balyeat said the indicator provides information on operating deficits, and the size of those deficits.<\/p>\n

\u201cIf expenditures exceed revenues, an operating deficit exists,\u201d she noted, adding that the size of Van Wert\u2019s deficit put in the \u201ccritical outlook\u201d category.<\/p>\n

The indicator underlines the city\u2019s quandary in having to use a portion of the .22-percent tax to fund police and fire salaries and benefits. If the money is used for those purposes, instead of capital purchases, both departments could find themselves short of funds needed to purchase equipment. That, in turn, could result in decreased fire and police protection for the community.<\/p>\n

Balyeat added that a majority — nearly 70 percent of the city\u2019s General Fund — goes for police and fire operating expenses: salaries, benefits, relatively minor equipment purchases, and other operating costs, while the .22 capital tax has been used to purchase cruisers, fire trucks and ambulances, and other more expensive equipment.<\/p>\n

\u201cWe are fortunate to have a tax that supports their capital purchases\u2026,\u201d the city auditor said.<\/p>\n

While both departments currently have good equipment, Balyeat said, that could change if a portion of the .22-percent tax continues to be needed to pay operating expenses.<\/p>\n

\u201cDo you want your police and fire to protect you with mediocre or less-than-desirable equipment?\u201d the auditor asked.<\/p>\n

In the second \u201ccritical outlook\u201d indicator for Van Wert, the percent of government revenues to the percentage of net expenses for governmental type activities (GTA) — with a ratio of less than 100 percent seen a critical outlook — the city\u2019s ratio of revenues to expenses was 95 percent in 2013 and approximately 99 percent in 2015.<\/p>\n

Obviously, Balyeat has noted, having expenditures exceed revenues is never a good thing, especially since state law requires that political subdivisions balance their budgets each year. Any year with a negative balance would force a municipality to use reserve funds to balance the budget, assuming it had any, to avoid being placed on fiscal emergency. Being placed on fiscal emergency would put the city under the fiscal control of the state, which could decide to lay off city workers — including police officers and firefighters — close parks, and possibly take away other services city residents now enjoy.<\/p>\n

\u201cAs we go on, the indicators that we\u2019re spending more than we\u2019re taking in, that gap just widens,\u201d Balyeat said, noting that the city has limited financial reserves it could use to make up any operating deficit.<\/p>\n

\u201cWe can spend more in 2017 than we take in because we have a little bit of a reserve balance \u2026 but as you go farther and farther, and dip more and more into those reserves, by \u201918 and \u201919, we won\u2019t have any reserves to dip into,\u201d the city auditor explained.<\/p>\n

One of the city\u2019s three cautionary indicators is also an area of concern, according to Balyeat and Mayor<\/p>\n

Jerry Mazur.<\/p>\n

The most important of the \u201ccautionary indicators\u201d the city received, Balyeat noted, was one that measures average daily expenditures to revenues.<\/p>\n

\u201cThis indicator identifies the number of days the city\u2019s cash and investments will sustain the entity, based on the daily average expenses\/expenditures,\u201d the city auditor said, adding that number is without additional revenues coming in.<\/p>\n

Having fewer than 30 days\u2019 worth of assets is considered a cautionary outlook, and, in 2014 and 2015, when the .22-percent tax was not used for police and fire expenses, Van Wert had less than 30 days\u2019 of cash and investments on hand.<\/p>\n

The mayor said that figure is particularly troubling.<\/p>\n

\u201cIt we don\u2019t have enough money to run beyond 30 days, we\u2019re in trouble,\u201d he said, noting that the city should ideally have enough cash and investments on hand to operate for six months or more.<\/p>\n

Meanwhile, although Van Wert can operate in the black for this year, the city could see an operating deficit in 2018, with that gap widening in years to come.<\/p>\n

That\u2019s a situation that would make staff and-or service cuts necessary to avoid a fiscal emergency declaration.<\/p>\n

Most of the blame for the city\u2019s current fiscal situation can be placed on the state, which has eliminated the tangible personal property and inheritance taxes, and also cut local government funds municipalities rely on.<\/p>\n

Mayor Mazur estimated that lost revenues from the above sources has cost the city approximately $800,000 a year — enough to keep city finances in the black.<\/p>\n

While cutting funding for municipalities, libraries, and other entities has given the state a $1 billion \u201crainy day\u201d fund, it has led to a number of cities and villages having to seek other revenues to remain fiscally solvent.<\/p>\n

The other factor for the city is its aging population. Although retired seniors don\u2019t contribute much, if anything, to the city\u2019s income tax revenues, they are the largest user group for EMS services, although Medicare and home insurance medical coverage does pay for a portion of those costs.<\/p>\n

Balyeat said cost cutting is not an option for the city, whose departmental budgets are already \u201ccut to the bone.\u201d<\/p>\n

For Van Wert, those factors have led to the necessity of placing a .28-percent income tax increase on the May primary ballot. With the current 1.72 city income tax, that would mean city residents would pay a total of 2 percent in city income tax. While that\u2019s higher than some neighboring municipalities, Balyeat and Mazur noted that a number of those communities are electric power generators, which brings in substantial additional revenues to those cities.<\/p>\n

If passed by voters, a .28-percent tax increase would generate approximately $1 million dollars annually.<\/p>\n

\u201cJust about enough to offset for what\u2019s been lost,\u201d the mayor said. \u201cThat would maintain us in a really good position to maintain the amenities in this town, and keep the services we have\u2026\u201d<\/p>\n

\u201cWe don\u2019t want to build a Taj Mahal, we just want to maintain what we have,\u201d Balyeat added, noting that Van Wert\u2019s Municipal Building has needed a new roof and HVAC system for some time, but there\u2019s no money to pay for it.<\/p>\n

Both Balyeat and Mazur also said the .22-percent safety tax needs to be returned to its original use if the city is to maintain adequate police protection, as well as keep its low fire protection rating.<\/p>\n

If approved, the tax increase would cost those making $50,000 an additional $140 a year in income taxes.<\/p>\n","protected":false},"excerpt":{"rendered":"

DAVE MOSIER\/independent editor The 2015 financial health indicators report on Van Wert recently released by Ohio Auditor of State David Yost underscores concerns city officials have about Van Wert\u2019s General Fund finances. The state-generated report identifies a municipality\u2019s fiscal practices and budgetary conditions that, if uncorrected, could result in the community being placed on fiscal […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-84105","post","type-post","status-publish","format-standard","hentry","category-news"],"publishpress_future_action":{"enabled":false,"date":"2026-08-03 04:09:42","action":"change-status","newStatus":"draft","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/thevwindependent.com\/news\/wp-json\/wp\/v2\/posts\/84105","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thevwindependent.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thevwindependent.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thevwindependent.com\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thevwindependent.com\/news\/wp-json\/wp\/v2\/comments?post=84105"}],"version-history":[{"count":0,"href":"https:\/\/thevwindependent.com\/news\/wp-json\/wp\/v2\/posts\/84105\/revisions"}],"wp:attachment":[{"href":"https:\/\/thevwindependent.com\/news\/wp-json\/wp\/v2\/media?parent=84105"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thevwindependent.com\/news\/wp-json\/wp\/v2\/categories?post=84105"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thevwindependent.com\/news\/wp-json\/wp\/v2\/tags?post=84105"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}