While Jackson city officials await word from Columbus regarding a short-term fix to its current budget shortfall, a city income tax will once again be considered as a longer-term solution.
Predictably, the city's financial pickle was a main topic of conversation during Jackson City Council's meeting of Monday evening, Nov. 13. The city was confronted halfway into the year with a major General Fund shortfall as a result of the most recent state audit.
A finding in that audit report restricts -- at least for now -- how the city can use the utility funds it moves to the General Fund as a result of allowable rents and rights-of-way reimbursements. Specifically, the audit finding affected money which was allocated to the police department, which is the largest part of the General Fund budget.
The city's short-term solution was requesting that the Ohio Tax Commissioner approve a one-time $751,914.25 from the Electric Fund to the General Fund. If approved, the fund transfer would exactly fill the financial hole created by the state-audit finding. Council passed a resolution approving this emergency request at its Oct. 30 meeting with Councilman Ron Queen casting the only dissenting vote. The resolution stated the transfer would not adversely affect the financial stability of the Electric Fund.
At Monday night's meeting, Law Director Joe Kirby reported that the Ohio Tax Commissioner had not yet made a decision on the transfer request, but had requested additional information on "eight specific items."
Kirby explained, "We are the very first ones to request this under the new format. They just want to make sure our request will not cause any injury."
City Auditor Brett Reed added, "The transfer is not a done deal. We are waiting for a reply from the Tax Commissioner; they want more information."
Reed also sounded a warning that the city will face a General Fund budget shortfall after this year. If the transfer is approved, the city will have some carryover money to fill the fiscal hole in the 2018 budget. He predicted the city would be within approximately $100,000 of what it will need for the General Fund. However, the problem would greatly worsen in 2019 as there would be no projected carryover monies to use.
He also sounded a warning that if an income-tax proposal is pursued to provide new revenue, the city would not realize full revenues for some time. He estimated that only 40 percent of the potential revenue would be realized after one full year of implementation and that it could take three years to realize full revenues.
Mayor Randy Heath told councilmen they need to immediately confront the need for an income tax. He pointed out that if council chooses to place it on the ballot, the next scheduled election is not until May 2018. (City voters soundly defeated a 1 percent income-tax issue in the November 2015 election.)
"We are going to be short in 2019," Heath declared, "and if the Tax Commissioner doesn't approve the transfer, this city will be in a world of hurt." He then urged council to schedule a meeting of the Budget and Finance Committee to discuss the financial issues, including the prospect of pursuing an income tax. "I think it's doubtful whether we can even wait on a ballot issue," Heath added.
Councilman Brett Foster later urged Budget-Finance Committee Chairman George Kitchen to schedule a meeting. Kitchen then scheduled a committee meeting for 7 p.m. on Monday, Nov. 20 at the City Council chambers. The purpose of the meeting is to discuss "all items pertaining to the budget."
Kitchen agreed the solution would be an income tax, but repeated his complaint regarding the alleged lack of council participation in the budget-making process.
"I'm not against trying to get it done, but not with the same typical attitude the administration has about the budget," Kitchen stated. "This my-way-or-the-highway thing is not good for this city." The prospect of employing a line-item budget had been discussed at a recent meeting as a way of increasing council oversight of the budget and spending.
"If council wants a line-item budget, I have no problem with that," Heath responded.
Reed then declared that council has always had the final say and the responsibility about what and how much ends up in the budget.
Line-item [budget] or not, what is in the budget is up to council," Reed declared. "It is up to you [council] what you do with the budget."
Councilman Queen commented that it's his understanding that language in the police department's union contract states that cuts must be made elsewhere in the city budget before the police budget is cut.
Reed replied that making cuts outside the General Fund would not positively affect the General Fund. And if large cuts have to be made in the General Fund, he says these would have to impact the police department's budget.