City loses tax, must cut budget

May look at roundabout alternative

By Sheryl Roadcap -

SIDNEY —The proposed roundabout on state Route 47 may be off the table as part of the city’s improvement project.

During Sidney City Council’s workshop session, Monday, it was revealed that a state Route 47 alternative may be one of the ways the city could adjust the 2017 budget and save approximately $401,600. The savings may be necessary because of a loss of $1.1 million in business income tax revenue.

City Mananger Mark Cundiff said the city was recently informed by a local business of its intent to change the way it files its consolidated tax return. That affects the city’s revenue. City Finance Officer Ginger Adams would not name the business.

The revenue is generated from municipal income tax collections by withholding taxes from people working within the city and from direct collections from businesses’ profits. The withholding portion represents about 70 percent of the city’s revenue and direct collections equal around 30 percent.

The business’s tax filing change will result in a loss of 22 percent of Sidney’s 2017 budgeted direct collections, Cundiff said.

Due the loss, Sidney is revising its the 2017 budget and current five-year plan. During Monday’s meeting, Adams and Cundiff presented council with potential changes to the adjusted plan for years 2017-2021.

Cundiff said the revenue loss in addition to comments received from the public about the roundabout informed the recommendation to look at an alternative. No further information was given about the roundabout alternative, Monday. Council plans to discuss that improvement project at the next meeting, May 8.

The goal of the budget revision, Adams told council, is to proactively manage the revenue loss; maintain the general fund’s balance at 20 percent above the minimum reserve of approximately $3 million; avoid direct cuts in the city’s existing service and maintain its current level of service; and focus on the city’s needs rather than wants.

“The earlier you can make changes (in spending), the better off you will be,” Adams said.

The estimated loss of $1,112,000 will include a loss of street capital tax estimated to be $159,000 for the duration of the five-year, 0.25 percent street levy that was approved in 2014.

The loss of revenue will result in cuts to general fund line items and capital improvements.

Adams said the “biggest hit” will be to the general fund with an estimated $762,000 loss annually. The general fund is the city’s basic operating fund. It provides for city services such as police, fire, municipal court, administration, finance, parks and recreation and engineering, among others. It also subsidizes other operating funds, including city transit, the swimming pool and the cemetery, among others.

The loss to the capital improvement fund is approximately $191,000. This fund pays for police and fire equipment and roads and bridges repairs, that are not covered by street capital tax levy money, for example.

Adams said changes to street repairs in 2017 are not expected, as work on these projects has already been bid out to contractors.

Some of the proposed general fund cuts discussed Monday included adjustments from municipal tax and 2016 general fund balances, staff health insurance renewal premium costs and the workers’s compensation 2017 rebates. These balances going into 2017 were better than were projected. The favorable balances will help the lower necessary cuts from the general fund as part of 2017 budget. Among other proposed adjustments were eliminating additional money contributed from the general fund to the capital fund and looking at staffing options.

The plan proposed holding off on several capital improvements that are considered more of a “want” than a need: an additional land purchase for fire station No. 3; Ohio building rehab other than the roof, which is still budgeted to be repaired or replaced; stormwater sewer and drainage repair projects downtown; and others.

Adams told the Sidney Daily News the change was not necessarily a shock because direct collections are traditionally volatile and fluctuate up and down over time. However, she said since the Great Recession of 2008, this source of tax collections had been steadily going up.

She said the advantage of looking five years out, and spending conservatively, is that if something like this happens, there is not in a need for drastic changes.

Adams said the next steps are to closely monitor income tax collections, prepare a five-year plan for 2018-2022, with adjustments as needed, and reduce appropriations for 2017.

May look at roundabout alternative

By Sheryl Roadcap

Reach the writer at 937-538-4823.

Reach the writer at 937-538-4823.