Streetsboro -- A vote on the city's $25.05 proposed budget for 2013 never materialized at City Council's Jan. 14 meeting. Instead, the budget was placed on second reading by Council.
"I really want to pass the budget, but we need to look at it a little more closely," said Councilwoman Julie Field, chair of Council's finance committee. "The overall spending from last year's budget has increased. We don't know what the [income tax] revenue will be. I'd rather start lean and cautious, then prioritize."
Mayor Glenn Broska, though, said if more money is cut from the individual city departments, "we'll seriously affect the way these folks run their departments. The majority of line items in these departments have [already] been significantly reduced [in the proposed budget]."
Council President Tim Claypoole was in favor of exercising more caution.
"This [proposed budget] is outside my comfort level of safe deficit spending. There are long-term committed expenses [in the proposed budget]. It is very hard to cut expenses and remove this spending."
The deadline for approving the budget is March 31.
Council and the administration appeared close to agreement on the budget after a Jan. 7 meeting.
The budget proposed by Broska in December was based on a forecast that income tax revenue would increase by 4 percent in 2013, while some Council members, including Claypoole, believed the increase would be closer to 3 percent.
A 4 percent increase would mean about $100,000 more for the city than a 3 percent increase, Finance Director Mitch Michalec said.
According to Michalec, the city anticipates receiving $8.677 million at a 3.5 percent increase over last year's actual income tax collections of $8.384 million in the general fund.
At the Jan. 7 Council meeting, Councilman Chuck Kocisko suggested a compromise projection of 3.5 percent, meaning a forecast that income tax revenue would increase by 3.5 percent in 2013.
"I think income tax [revenue] is going to get better," Kocisko. "I'm encouraged. I honestly think there will be an upswing."
Council Vice President Regis Faivre agreed with Kocisko, saying, "I have no problem with 3.5 percent. You're better off being conservative."
Claypoole, though, said he preferred to go with 3 percent.
"Three percent is a reasonable number," Claypoole said. "You can increase spending [later on], but it's harder to decrease spending. I don't have a rosy picture of the economy. I come from the philosophy that you take a conservative look and increase [revenue] down the road [if you're able to do so]."
Broska said he believes 3.5 percent is "a very conservative number."
"I believe our revenue increase will be in excess of 5 percent, and 5 percent is highly attainable," Broska said.
Broska added that only 96.5 percent of the money in the 2012 budget was spent.
"That is a heck of an accomplishment," Broska said. "That is a pat on the back to my directors and to me."
Broska said he is "fine" with the 3.5 percent projection, which will be reached by cutting about $50,000 out of the budget that was proposed in December.
"I went back to the [city] directors and said, 'We've got to make this work. We will have to work within the confines of the budget.'"
Michalec said almost all city departments "shared the pain" when it came to further appropriation cuts in the budget. He said the only areas where no further cuts were made were the building department and Council's own departmental budget.
"I wish we didn't have to cut anything out of the individual departments," Broska said. "The budget we submitted to Council previously was a workable budget. What we proposed was not something that had not been done before."
Regarding "deficit spending," Broska said while that term is used conversationally, it isn't accurate.
"We started the year with a carryover," Broska said. "That is money in the bank. It is the way business has been done for quite some time. By law, we can't have deficit spending."
Michalec added, "The so-called 'deficit' spending certain members of Council are referring to is for the general fund only -- meaning current proposed appropriations for 2013 exceed estimated revenues for 2013 in the general fund by that amount, not taking into account the carryover balance from 2012."
Michalec said for the general fund, the carryover balance is about $2.245 million.
"On Dec. 31, that money is carried over," Broska said. "It has been earned in previous years. It gives us a cushion that we can start the year with."
Michalec said the financial breakdown of the proposed budget goes like this:
The total appropriations in the 2013 proposed budget's general fund is $11.974 million, compared to the total amount appropriated in last year's general fund budget of $13.058 million. The difference is the money budgeted, spent and paid back in the form of a grant for the 116-acre Verna M. Beck property, located in the flood-prone area of Route 303.
The total appropriations requested for all funds in the 2013 proposed budget are $25.05 million, compared to last year's total appropriations of $27.546 million.
The total projected revenues for the 2013 proposed budget are $23.971 million.
The difference between expenditures ($25.05 million) and revenue ($23.971 million) is $1.079 million. About $550,000 of that is accounted for and will be met by the general fund carryover. Michalec said the second roughly $500,000 would come from the other funds in the budget, "many of which are not dependent on city tax revenues at all."
Michalec said depending on the fund, it can come from allocations of municipal income taxes (to the capital improvement and the bond retirement funds, in particular}, fees for services, state funding, federal/state pass-through funding, real property taxes levied by the county and forwarded to the city for specific purposes (for instance, bond retirement or police pension funds), grant funds and donations, if applicable, deposits (for signs and things of that nature), and other taxes levied by the city, which do not fall under the municipal income tax category, including the bed tax.