Crunching the numbersPublished 12:02am Sunday, December 23, 2012
Notches were added to the City of Ironton’s proverbial belt early in 2012. The tightened budget included raising fees, cutting a department, laying off personnel and increasing retirement contributions for some employees.penny
Heading into a new year, Ironton leaders are drafting a plan that keeps the belt tight and maintains the status quo of a reduced workforce, yet officials are optimistic the city could end 2013 with a little more breathing room.
The city’s finance committee and council members, along with finance director Kristen Martin and Mayor Rich Blankenship, are already hard at work on a projected 2013 general fund budget for the city. The group implemented a self-imposed deadline of Jan. 30 to finalize the plan. By law, council has until March 30 to certify a permanent budget.
“I am hopeful (council) will make the time that it takes to meet and thoroughly go over the budget and get this done in January instead of late March as we have done in prior years,” Blankenship said. “I feel like there is no reason why we can’t get this done by the end of January.”
Council chairman Mike Lutz is also optimistic this will happen and that the city will have a strong plan in place despite the significant challenges it faces.
“We are way ahead of schedule compared to where we have been in the past,” Lutz said, adding that the current proposal will likely need to be fine-tuned and modified. “We are committed to having it done by Jan. 30.”
Although none of the city’s leaders can predict exactly what the final budget will look like, here is how the current draft is shaping up.
The projected general fund revenue for 2013 is $5.25 million, compared to $4.9 million in 2012. The city is projected to spend a total of $4.89 million, compared to $4.93 in 2012.
Whereas 2012 started with a general fund balance at a deficit of $165,186, Martin has projected 2013 will begin with a carryover of $56,634, saying the city is beginning to rebuild from previous years of expenses exceeding the city’s revenue.
“In 2007 we had a $1 million carryover,” Martin said. “Well, we ate it away and our expenses exceed our revenue year after year. And 2008 came and we had a huge drop in the economy and a huge drop in the tax base for unemployment, a huge drop in the revenue. And that’s how you eat away at your carryover. It sustained us for three or four years. Then we bottomed out and now we are building back up from that.”
The city’s workforce was cut by about 12 employees in 2012 and, at least for now, current-staffing levels will stay the same. All non-union employees — except for municipal court employees who already received raises in 2012 — are projected to get a 6 percent pay raise and employee contributions for their benefits will stay the same. The city is still negotiating with two of its three unions so all those salaries and benefits are currently budgeted at the 2012 rates.
By the end of 2013, the city is projected to have a $358,023 general fund carryover with the total general fund expenses being reduced by more than $40,000 compared to 2012.
Councilman Aaron Bollinger said the budget is still a work-in-progress but that it is built on a solid plan, even if that plan doesn’t always make everyone happy.
“Unfortunately the council is faced with a lack of revenue in the City of Ironton,” he said. “We are tasked with keeping the city afloat, providing services to the citizens of Ironton and making tough decisions in order to keep our long-term goals.”
The projected revenue of $5.25 million is about $350,000 higher than 2012. It reflects an increase in income tax revenue of about $50,000 due to the repeal of the long-standing reciprocity agreement that went into effect in April.
Individuals living in the city but working in other municipalities with an income tax were only required to pay a half percent to Ironton. Those individuals are now required to pay the city’s full 1 percent income tax.
The revenue also reflects a $175,000 loan the city took for the purchase of five police cruisers. Since the money was paid to the city from a financial institution, it must be recorded as revenue.
The police department’s expense budget for 2013 reflects the first payment to that loan in the amount of $46,500.
The city’s revenue also sees increases in rent at the city center by $500 per month and a transfer from municipal court probation for $63,000. Judge Clark Collins offered to transfer this amount to cover the retirement expense of the court and the community corrections employees as a way to help the city’s general fund.
There are also some revenue losses new to 2013.
“In our case, the last three years we’ve had significant cuts to the state and local government funding and a phase out of inheritance tax,” Martin said.
Ironton will receive $50,000 less in county funds and $3,600 in state funds.
There will also be less in municipal fees to the tune of $103,200.
The city’s $14 per month municipal fee, which was raised from $8 in 2012, is currently set to be reduced to $11 beginning in April based on the legislation that was adopted last year.
The projected general fund budget is $4.89 million, compared to $4.93 in 2012.
With the more than $50,000 carryover anticipated to start 2013, it is projected that the city will have a $5.2 million in revenue to fund its 16 departments that range from police and fire to the council and mayor’s departments. That is approximately $260,000 more than last year.
The city reduced its workforce in 2012 including cutting six employees from public works — one each from the street department, sanitation, wastewater, income tax and water distribution — and five from the police/dispatching department.
The biggest change actually came with the transferring of police dispatch services to the Lawrence County Sheriff’s Office. Three positions were cut and the savings will be fully realized in 2013. City dispatching was disbanded in June but the expenses totaled more than $105,000. Next year, there will be no expenses.
“You can see that we spent out in 2012, $105,000, even at the abolishment of the department,” Martin said. “We still took on that much expense. In 2013, we will not have any expense regarding that, so immediately you see a reduction in expenses of $105,000 because that department is no longer here.”
The police department’s projected 2013 budget, the second highest funded department if you don’t include the unallocated department expenses, is also more than $20,000 less than in 2012 and even more if you factor out the payment on the new cruisers, with a budget of $1.25 million.
Of that reduction, $10,000 alone was from salaries, in part tied to the fact that two officers were laid off midway through the year. There were also reductions in expenses for overtime salaries, holiday overtime and employer share of Medicare and retirement.
The income tax department also will receive fewer funds, to the tune of about $20,000, due to the fact that one of its union employees was laid off this spring.
Nine of the city’s departments in the general fund will have slightly larger budgets tied, in part, to a proposed 6 percent increase in salaries for the non-union personnel.
Martin said some increases were budgeted for all departments including a 5 percent hike in hospitalization costs, 3.5 percent in worker’s compensation and 3 percent across the board in every other operating account, such as supplies, fuel, utilities and maintenance.
“A budget is a living document,” Martin said. “You can have more than what you need or you can have not enough. So we have the flexibility by ordinance to increase and decrease the appropriations as needed. But we try to stay within the confines of the budget. … We try to hold our department heads accountable for their maintenance costs, their operating costs, their office supplies. The things that you have to prioritize.”
The city has also budgeted a minimum 5 percent increase in the total insurance premium for 2013. Currently, the city pays 95 percent of insurance premiums and employees contribute 5 percent.
Family plans break down to the city contributing about $1,333 a month per family while the employee contribution is about $70 per month. For employees on the single plan, they contribute about $31 per month with the city picking up about $597 per employee per month. The current enrollment has 67 family plans and 16 single plans.
If enrollment stays the same, the city will pay $1,150,274 annually for the family plans and $120,758 annually for the single plans. That’s a total of $1,207,481 paid by the city with $63,551 coming from employee contributions.
Non-union workers will continue to pay 7.5 percent of their retirement pickup. For those 19 employees, that is a total savings to the city of about $74,500.
The firefighters union agreed to pay 3 percent of their retirement and made cuts to each firefighter’s uniform and food allowance to make up the difference.
AFSCME and police union employees currently do not pay anything towards their retirement pickup, with the city covering the entire 10 percent as well as the standard 14 percent employer share. AFSCME is currently operating without a contract and in negotiations. The police union is under contract with a clause that allows the union to negotiate salaries and benefits.
Blankenship said negotiations have been ongoing.
“Right now, I am diligently trying to continue the negotiations with the unions,” he said. “Trying to come up with a settlement.”
It is projected that the city will end 2013 with a carryover more than six times larger than it began the year with, after coming off a deficit year, and with only a few minor changes in the budget.
Martin said just a few steps can turn a budget around.
“You had layoffs. You have a lot of changes in expenses, and you’re starting to realize those savings,” Martin said. “Your workforce is less. Your benefits are less. Your contributions to their retirement plan and all these other things are less. So you’re just really starting to reap some of those benefits.”
But Blankenship said fewer members of the workforce have had a negative impact on the city.
“We’ve had to tighten our belts and we’ve had to delay services because of a shortage in personnel,” Blankenship said. “My department heads and my employees are trying to do the best we can with the number of employees that we have. There are so many issues during the course of a day and it’s just impossible to get everything done at one time. I appreciate the citizens for their patience, but we are rebuilding, and I am optimistic that we will get there.”