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home : local news : local news
September 20, 2017

9/8/2017 3:33:00 PM
Jackson facing financial deficit
Jackson City Auditor Brett Reed
Jackson City Auditor Brett Reed
Without additional revenue, spending cuts, or a combination of the two, the City of Jackson will be facing a large projected financial deficit in its General Fund in 2018.

City Auditor Brett Reed delivered that grim news at a meeting of Jackson City Council's Budget and Finance Committee on Monday evening, Aug. 28. He stressed that he was providing "a worst-case scenario" projection based on current figures and information, but that he felt it was important for city officials to realize what the city will be facing in the 2018 budget for the General Fund.

The General Fund provides funding for the police and fire departments and also for general government operations, including the central administration with the police department being the big-ticket item from an expense standpoint. The shortfall does not directly affect other funds, including those covering the city's utility departments.

Reed is projecting the city will face an estimated shortfall of $770,000 in its General Fund by the end of 2018, based on currently anticipated revenues and expenditures. If the current course continues, that deficit would grow to $1.4 million in the 2019 budget. He warned that city leaders will have to make course corrections very soon since the city cannot legally adopt a budget in which the appropriations exceed the available funding.

And based on a discussion which took place after Reed had announced his bad news, city leaders haven't decided on a short-term course of action. At this point, it would appear council may lack the majority votes to impose an income tax, but nobody advocated cost-cutting layoffs either.

"This is not anything new," Reed told the city leaders. "We have been going down in the General Fund for a couple of years. We need additional funding for the General Fund."

Reed reminded councilmen that he advised them last year that the city was losing ground in the General Fund and that he personally had recommended last year that council impose a city income tax.

Instead, council voted to place a 1 percent city income tax on the November 2017 general-election ballot, but the issue was decisively defeated by a percentage margin of 63 to 37.

After the defeat of the tax issue, city leaders have not publicly discussed either imposing the income tax or placing another tax issue on the ballot.

Reed's financial figures and projects covering the years 2017-2019 show the General Fund's negative financial direction. The city began 2017 with a $1.4 million balance in the General Fund. New revenues for 2017 are estimated at $3.102 million and the year's expenditures at $3.9 million. Thus, expenditures are projected to outpace new revenues by almost $800,000 during the year; however, the in-year deficit is more than covered by the beginning balance.

But if there is not a change in course regarding revenues and expenses, the General Fund would dip into the red sometime in 2018. Reed projects the city will begin 2018 with a General-Fund balance of $602,000, which would be wiped away by a disparity of $2.528 million in projected new revenues versus $3.9 million in projected expenses. This would leave the city with a General-Fund deficit of $770,000 by the end of 2018.

If revenues and expenses continue on their current course, the fiscal hole would deepen even more in 2019. By the end of 2019, Reed is projecting a deficit in the General Fund of $1.372 million.

Reed told city leaders that his figures are not absolute and are only estimates and that his office is currently redoing cost allocations, which could result in more revenue from this particular source.

"I think this is something council needs to be aware of," Reed said of his financial projections. "In my opinion, you're very short and you cannot go into the new year without a plan in place, and you cannot have a budget where the expenses exceed the revenue. I'm not here to tell you what to do; I'm here to tell you what I see."

Holzer Medical Center

City Leaders' Reactions

The financial ball is now in the court of the city administration and council, but the decisions won't be easy ones and none were made in the initial fallout discussion at the Aug. 28 committee meeting.

If council chooses the additional-revenue option, an income tax remains the most viable option. A 1 percent income tax would generate an estimated $1.2 million, but it's too late in the year to hustle another issue onto this November's ballot. The very soonest time to give the electorate another opportunity to pass any type of tax would be a special election in February.

Jackson Mayor Randy Heath, who made a detailed case last year for the need of a city income tax, pointed out once again that there are 244 cities in Ohio and that Jackson is just one of four not to have a city income tax. Furthermore, he added that Jackson is the only city in Ohio not to have either a city income tax or a dedicated property tax to support the police department.

"I think that shows we have had judicious spending," Heath concluded.

Council could still impose an income tax, but lacked the votes to do that last year and there is no indication things have changed. The majority of councilmen have expressed a belief that more revenue is needed, but not all of them are willing to impose an income tax themselves.

"I personally would vote for an income tax, but I would not want to impose an income tax," declared At-Large Councilman George Kitchen, who is chairman of the Budget and Finance Committee. "I think we need to be aware of how people are perceiving us."

At one point in the discussion, Third Ward Councilman Jeff Elliott remarked that he thinks "it's the responsibility of city council" to provide the necessary funding for the city.

If the city does pursue an income tax issue, Council President Eric Brown judged that it would be better to earmark the revenue for the police department, which, by far, consumes a large share of the General-Fund budget. The 2016 issue was earmarked for an extended list of infrastructure improvements, including street paving, curb and sidewalk repair, the renovation of the Memorial Building and creek cleaning.

Another option would be a property-tax levy to expressly benefit the police department, which would put the decision in the hands of the electorate. However, Mayor Heath pointed out it's his understanding that a one-mill levy would raise only about $100,000, a fraction of what a 1 percent income tax would generate. He also said the tax burden is shared with more taxpayers with an income tax than with a property tax.

The other course of action is to make funding cuts, and this would most likely impact the police department personnel since this is the big-ticket item in the General Fund. Nobody expressed a desire to go that route either.

"I would put our police department up against anybody else's," Heath declared. "They're veterans and they know how to handle difficult situations."

Kitchen later commented, "We sure as hell don't need a layoff [in the police department] with the amount of drugs we have around here. We've got good fire, and good police. We've got good people."

Heath later stated his fear is that a layoff of police officers would result in the "drug dealers" taking over. "That is what worries me most," he said. Kitchen quickly responded, "We're overrun by drugs now."

The committee meeting ended with no resolution or planned course of action.

"We are sitting here with a real dilemma, in my opinion," Kitchen remarked. "I don't have a clue, but we have a major issue to look at."

Reader Comments

Posted: Friday, September 15, 2017
Article comment by: Daniel Leonard

Naturally, their first thought is more taxation on an already overtaxed population, while a more appropriate course would start with paying salary for city government officials commensuate with the amount of actual work they perform.

Posted: Friday, September 8, 2017
Article comment by: Ray Napper

Here's an idea, why don't you paste up all salaries of ALL government employees. I've never seen a place with so many businesses that are broke. How do you spent what you haven't got. The average homeowner there doesn't get to do that. They all live within a budget. Even this newspaper and everyone that works there must work off a budget. Shame on you. You have no plans? Then resign.

Posted: Friday, September 8, 2017
Article comment by: Carisa Edwards

Randy Heath and Brett Reed could start by giving back their raises.

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