By Rich Wilson
| Thursday, October 30, 2008, 07:28 PM
The following are excerpts from the speeches made by City Manager Mark Brandenburger and Mayor Don Ryan during the State of the City Address.
In some instances, Brandenburger and Ryan improvised or otherwise changed what they wrote down to say, so the words may differ from what was heard today during the Red Carpet Luncheon.
City Manager Mark Brandenburger
“Probably everyone is acutely aware of the financial problems governments at all levels are having, and Hamilton’s general fund is experiencing some of the same.
Keep in mind that the general fund is the only pot of money that city government is allowed to use to pay for general city services. These include police protection, fire fighting, paramedic response, parks and recreation, health department nurses and building code compliance.
And, the general fund has also helped pay for public works engineers, not to mention subsidizing road paving and street projects.
Paying for all these employees and the services they provide Hamilton consumes 77 percent of the general fund. More than 60 percent of that is just for police and fire.
City government in Ohio cannot use utility funds to pay for these services. The law does not allow t his — with one exception I’ll talk about later.
So where does the general fund get its money? Here are the three biggies, and they are all tax monies: $19 million, local income tax; $3 million, property taxes; $2.5 million, state of Ohio shared revenue.
With City Council’s approval early this year, shortly after our finance director resigned to go work for another city, we retained a national accounting firm.
Why?
We wanted that firm to take an independent outside look at Hamilton’s financial situation.
We asked them to forecast what the City’s general fund expenditures and revenues both would look like over the next five years.
That forecast was completed in May and shared with everyone.
It warned that Hamilton’s general fund balance would be $1.2 million at the end of 2008 and negative $4 million at the end of 2009 — Unless we started to take action then and there to either increase revenues, decrease expenditures or both.
According to finance professionals, Hamilton’s general fund year-end carry-over balance should be 5 to 15 percent of the budget.
A bare bones minimum would be at least $2.5 million, not $1.2 million, and certainly not negative $4 million.
With City Council’s blessing, this summer we implemented — effective immediately — a 2008 budget cut plan for the entire city, including hiring freezes and expenditure reductions to help preserve general fund monies and avoid layoffs.
And, that has helped a lot — to a degree.
Allow me to explain.
We are still in the process of preparing a 2009 budget — for the general fund and all other funds for that matter.
For this 2009 budget, we’ve given general fund departments specific monetary targets that they must reach, and department heads are attempting to reduce expenditures to meet those 2009 targets.
But, even with a budget of zero growth, the general fund budget won’t balance.
In order to balance it for 2009, we will still need to save more in 2008, to cut staff in 2009 or increase revenues in 2009.
That’s because even with all we’ve done this summer with hiring freezes and expense reductions, it’s just not enough.
So, what are we doing?
First, city employees as a whole in all departments and divisions, including our nine labor unions, are looking at health care savings through our health benefits committee.
The committee has looked at changes on health care to reduce the city’s cost.
The national accounting firm projected that cost to increase 6.7 percent.
Hamilton’s health care provider just announced 12.2 percent increases in cost for next year.
But, through plan changes recommended by the committee, that overall cost increase for health care has been whittled down to 2.3 percent instead of 12.2 percent and instead of the 6.7 percent projected by the national accounting firm.
And, additional initiatives also recommended by the committee have the potential to push the 2.3 percent figure even lower.
Second, you’ve all heard or read about the state kilowatt hour tax, and that would increase general fund revenues by $2.6 million per year if council were to enact it in full.
The kilowatt hour tax shows on the electric portion of your city utility bill now.
But, Hamilton City Council has credited it from your bill ever since that tax was authorized by the state of Ohio eight years ago.
So, the tax shows on your but it also shows as a credit that’s taken off your bill by City Council.
That means you’ve never paid the extra amount that Hamilton could charge as a tax on electricity.
By state law, those tax proceeds would go to the city’s general fund.
All other cities that have electric operations charge this tax.
All investor owned utilities, such as Duke, already have this kind of charge embedded in their electric rates.
All electric customers residing outside the city limits have to pay this tax because state law says so, and their payments must be sent by Hamilton to the Ohio state treasury.
We heard at an electric conference yesterday in Columbus that the state of Ohio is looking under every rock for more money for its general fund.
Some fellow attendees, people who are pretty savvy about statehouse matters in Columbus, expressed the fear that any city that hasn’t already enacted the kilowatt hour tax to support its own general fund, and Hamilton has not, may be required in the future by state law to enact the tax and send it to the state to help the state’s general fund.
Wouldn’t that be a kick in the city’s pants?
Don’t get me wrong. Whether or not city council chooses to adopt the kilowatt hour tax a little at a time, all at once, or not at all remains only a discussion item.”
Mayor Don Ryan
“There’s eight weeks left to approve a balanced budget for 2009 and it’s going to be extremely difficult for council to determine how to make up a million dollar shortage.
We’ve been discussing the budget for six months and we’ve knocked it down from $2.5 million to $1 million deficit. Our cost of doing business next year will out pace our revenue.
Some of City Council, including me, are against implementing the 6 percent kilowatt hour tax and passing our burden onto the citizens and businesses.
Most cities in the United States are facing this same budget crisis so it’s not that Hamilton is or has done anything wrong. The national economy is what it is, and council’s job is to deal with it in the most equitable way possible.”
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