Where does the money go?

Published 12:00 am Sunday, January 5, 2003

Operating a city, even a small one such as Ironton, requires an extraordinary amount of money and paper work. City Finance Director Cindy Anderson works behind the scenes to crunch the numbers and make sure the city has the necessary funding in the right places.

Finance director since 1993, she has managed the city's money in one capacity or another since 1987.

"I did every job (in the finance department) at one time or another," she said. "I worked my way through the ranks."

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Anderson is not alone in tackling the daunting task of managing the city's finances. The department includes a full-time assistant finance director and a deputy auditor and a part-time clerk who work together to implement the city's budget and handle day-to-day operations.

Where does the money go?

The question most people want to know is, what do we get for our tax dollars? To understand that you must first look at how much it costs to operate the city of about 11,000 people and how the entire budget is structured.

In 2002, the city's total expenditures were approximately $10.5 million that came from a variety of sources including various taxes, service fees, loans and state and federal funding.

Last year's expenditures were about $400,000 more than the city's total revenues. The difference was drawn from carryovers and reimbursements from the previous year. As 2001 ended, the city had a carryover balance of $700,000, and just as a preliminary guess the city could have a carryover of $800,000 for 2003, Anderson said.

"The additional carryover came from belt-tightening and just watching expenditures," she said.

Ironton's budget is primarily divided into two distinct categories -- general funds and enterprise funds.

General funds include all the basic governmental departments such as police, fire, the mayor's office, courts, engineering, public facilities and more.

Seventy-six percent of the general fund is derived from taxes of one kind or another including the city's 1-percent income tax, property and state taxes. Property taxes are assessed by the county and then distributed to the city.

Court costs and fines account for 9 percent of the general fund, service charges such as building permits, parking meters and licensing fees account for 8 percent and the remaining 7 percent comes from interest, transfers and miscellaneous.

In 2002, $3.65 million, about a third of the total budget, came from the general fund. Salary and benefits of the city's approximate 100 full-time employees accounted for 66 percent of these expenditures. Nearly half of the general fund, $1.75 million, is required to operate the police and fire departments alone.

"We are a service industry," she said. "So the biggest cost is manpower."

Enterprise funds are all fee-driven and come from what residents pay for services such as garbage, sewer and water.

The four primary funds within the enterprise categories are water, sewer, sanitation and the fire fee. These four funds accounted for $3.5 million of the total budget and are used for the operation of the respective departments.

"The enterprise funds are designed to be self-supporting so it doesn't drain the general fund," Anderson said. "These funds have been self-sufficient since I have been here."

In total, the budget is comprised of more than 40 different funds that help account for the remaining $3 million in expenditures. Many of these are small and only for special purposes.

Some that are derived from property and other taxes include the flood fund, recreation, swimming pool and police and pensions. State taxes, such as the tax on gasoline, and the license plate tax provide the money for the street fund and the state highway fund to maintain the city's road systems.

Certain state and federal grants monies go to their own funds. The Community Development Fund is financed by the Community Development Block Grants. In 2003, these funds will be used to help construct a new fire station and possibly replace the city's water tank. The Empowerment Zone funding also has its own fund and will help finance the floodwall repairs.

All of the revenue and expenditures for each fund and each department must be accounted for in the city's budget.

Budgeting Process

Each year the city's budget expires on Dec. 31. The city must have a temporary budget, which only accounts for expenditures, in place by Jan. 1. A finalized budget must be adopted by March 31 each year.

"If we did not have a temporary budget it would violate state law and all expenditures would be illegal," she said. "We must have a budget to operate and this allows a three month period to get the books shut down and have the final figures from the previous year."

Council passed the 2003 temporary budget last month.

The budget is discussed in public sessions of council. The public's best way to provide input is to talk to a council member, Anderson said

Each year, an adopted copy is available to the public to view in the Mayor's office or the Finance Department. It is public record and can be copied for a fee.

Anderson said it takes about three weeks to initially prepare the city's 53-page budget and it is a yearlong process to keep renewing it.

Because businesses such as Cabletron, Allied Signal and River Valley Health Systems left the city, budgeting is a little more difficult now because there is less tax revenue and cuts were necessary, she said.

Normally, the budget only requires two or three changes a year but because 2002 was tight she had to make about 10 revisions, although most were only small line-item adjustments.

Each year, the main priority is that no department can owe money at the end of the year. There must be a zero debt balance or the state can declare the city in a fiscal emergency as happened in 1980, Anderson said.

"It took seven years to fully recover and be officially released from the fiscal emergency," she said. Cuts that were necessary included cutting nearly one third of the city's workforce that lead to laying off half of the city's police and firefighters.

"We worked our way out," she said. "Council works hard to ensure that we never return or even get close to that point again."

Funds can be transferred from any department within the general fund, but because of a city charter, money cannot be transferred from any enterprise funds. This allows taxpayers know that the money they pay for services is used to continue to provide that service, she said.

Looking ahead

"This year's budget will be comparable to 2002," she said. "The cuts were made three or four years ago. I do not foresee any cuts this year."

Once the final figures from 2002 are in, Anderson will sit down with Mayor to look at what his priorities are for the year.

Although nothing is set in stone, Anderson said one priority will be to replace at least six vehicles and other equipment that has been in need of repair for many years.

Anderson said she hopes to have the 2003 finalized budget passed by early March and will allow six or seven weeks for council to pass it.

"My biggest concerns (while budgeting) are keeping the current level of services and not making any cuts," she said. "If we can grow that is even better, but I do not see that it is possible until we start bringing businesses in."