Sandusky ready to tackle deficit issue

Sandusky officials must determine how to address a $1 million shortfall by March.
Andy Ouriel
Dec 9, 2013
They can:

a. Raise revenues, such as increasing taxes.

b. Cut staffing via layoffs.

c. Spend down the savings, or carryover, account.

Unfortunately, there isn’t a “none of the above” choice, so they must pick at least one option going forward.

The fiscal pinch stems from a budget projection showing almost a $1 million deficit in the $16 million everyday operating budget. The budget funds operations such as fire, police and greenhouse services.

A $1 million shortfall derives from a $500,000 federal grant employing six full-time firefighter positions ending this month. Another $500,000 is gone from a reduction in local government funds and estate taxes.

To maintain current operations, officials must find $1 million elsewhere before approving the budget in March.

It’s unlikely officials have the authority to raise taxes or find new income streams in just a few short months.

Meaningful talks about layoffs have not yet occurred in the public setting.

Any layoffs would further deplete an already-small work staff. City staffing levels have decreased 25 percent in the past decade, from 280 in 2004 to roughly 209 today.

But what about spending down the city’s carryover, totaling $4 million?

Despite the cushion, a high-ranking financial official advises against withdrawing funds from this savings account.

“Reserves are the cornerstone of financial flexibility,” Sandusky finance director Hank Solowiej said. “Reserves provide options for responding to unexpected or unplanned events or emergencies”

If commissioners did spend some of the reserves, they’d only provide a short-term fix with future problems looming.

“If we had to use reserves for only a year or two, it might be OK” Solowiej said. “If, over the long-term, we spend more than we bring in, eventually you will run out of funds. I know this would impact our bond rating and the cost of borrowing if reserves are depleted without a plan to restore them”

But consuming some carryover for day-to-day operations might be appropriate, city commissioner-elect Dennis Murray Jr. said.

“I’m in favor of a slight erosion of the reserves at this point in time,” Murray said. The carryover “has gotten a little ahead of itself of where it needs to be in relation to the general fund”

The two other newly elected commissioners, Dick Brady and Naomi Twine, said they oppose spending reserves. All three begin their new four-year terms in January.

Sandusky’s surplus
Sandusky’s reserves, also known as carryover, fluctuate based on what the everyday operation budget’s bottom line is each year.

If the year-end budget shows a $100,000 surplus, then that’s $100,000 added to the reserves. If the year-end budget shows a deficit of $200,000, that much is decreased.

The current surplus, somewhere between $3.7 million to $3.9 million, represents about 25 percent of what the city spends each year on operations, such as police, fire and greenhouse services.

Carryovers are good to boost a government’s bond rating when, for instance, officials need to borrow money for construction projects.

Year      Amount

2013     $3.7 million to $3.9 million

2012     $3.71 million

2011     $3.62 million

2010     $3.48 million

2009     $2.85 million

Comments

sugar

Welcome to the reality of Democrat big spending and big benefits coming to a big end. NO NEW TAXES. Sandusky has Cedar Point, most cities of this size do not, make due. So you morons took 1/2 a million in Fed money (knowing those morons borrowed it from China) knowing there was no way to refund these positions? Lay them off, I'll take my chances. Enough of this crap. THERE IS NO MORE MONEY TO STEAL FROM THE TAXPAYERS. I have gotten no raise, but thanks to obamacare my insurance went up, the county taxes went up, along with everything else, I have n more to give, better re-institute debtors prison.

toredown11

Thanks to Obamacare your insurance went up? Are you kidding? Health insurance only rose 4% for the second year in a row, compared to the 8% to 10% increases we've seen every year for the past decade.

The major reason for the increases? Hospital costs. And why the big increases in hospital costs? The hospitals tell us it's because they have to cover the costs of the uninsured patients.

What will happen next year is anyone's guess. If enough young people sign up for health insurance, then insurance rates will remain flat or see moderate increases. If they don't, then we're probably back to double digit increases and you and I pay for the uninsured.

YoMamma

"Any layoffs would further deplete an already-small work staff. City staffing levels have decreased 25 percent in the past decade, from 280 in 2004 to roughly 209 today."

And the cities population has decreased as well. When the tax base goes, so do the employees. Why not start with funding only what is necessary by law, then add on other items until the budget is balanced?

donutshopguy

YoMamma,

Other government institutions like schools need to heed similar advice.

topcop1991

Why not hire a city manager who actually does something? That salary and those at the administration level are overpaid. Give the money to the folks who keep us safe. These are the same folks who protect you 24/7 while you're sleeping, work weekends and holidays. Meanwhile, the administration is home every night, weekend and extended holiday. Thank you to our Police, Fire and other city workers for all you do.

YoMamma

+1 topcop!!

8ballinthesidepocket

Keep people employeed and everybody takes a 10% reduction in wages and benefits. Problem more than solved. We do not need more people laid off.

SamAdams

Any responsible individual who finds himself with a budget shortfall makes cuts in his spending. It may not be any fun, but that's what grown-ups do. And that's what the City needs to do as well.

Here's how you start: NECESSITIES.

The individual has to buy groceries, but he DOESN'T have to buy steak. The individual has to pay his heating bill, but he CAN turn the thermostat down. The individual might enjoy entertainment, but he DOESN'T have to subscribe to HBO or go to the movie theater as often (or at all) when he can stay at home and watch a DVD or read a book.

The City HAS to provide police and fire services. But it CAN engage in fewer "extras" until the budget shortfall is resolved. The City HAS to provide Court services and mow the grass, but it ISN'T required to rent out palm trees or book concerts. And the City SHOULD be enforcing things like lawn/trash violations and overdue taxes so that it's getting all of the money it should.

It isn't that hard, folks. Like I said, it's also no FUN, but it isn't complicated! Stop assuming you can further burden the cash-strapped taxpayer and put a little of the sacrifice on yourselves for once!