By Lee Murray
A state auditor’s report found several problems in Liberty Township’s accounts that raised “substantial doubt” about the township’s “ability to continue as a going concern.”
Officials blame severe cuts in state tax revenue, the elimination of estate taxes and a reduction in the property tax base for a 22.4 percent cut in the township’s general-obligation fund budget, which led officials to borrow from one account to cover another.
In 2011, the township had a general fund budget of $1.1 million. For 2013, that budget has been cut to $854,000.
Borrowing between accounts – specifically moving funds from the fire fund and the police fund into the general obligation fund – is forbidden by the state.
“They’re worried that we don’t have the dollars to operate the township,” said Liberty’s fiscal officer, John Fusco.
“We get through our bills and our payroll, but that’s about it. There’s no extra to do roads or to do anything else.”
Brittany Halpin, spokeswoman for the Ohio auditor, said that the state will offer assistance to the township.
“Yes, it is serious, and it is reported as serious,” Halpin said. She added that representatives from the Local Government Services section, a division that assists struggling townships with financial advice and evaluation, will meet with township officials to decide what is needed to go forward.
“Talk is cheap,” said Trustee Stan Nudell. “How can we spend the money differently? Unless we have more money coming in, we’re going to spend it the same way.”
Nudell added that the township is managing funds properly and can pay its bills.
Trustee Jodi Stoyak said that cuts in the Local Government Fund and estate taxes are to blame.
According to policymattersohio.org, a nonprofit research organization based in Columbus, Liberty incurred a $389,000 loss in local government aid as part of a $1 billion state budget cut for 2012 and 2013.
“The governor [John Kasich] has reduced our Local Government Fund,” Stoyak said, “and he’s taken away our estate tax. That’s gone after this year.”
The township’s estate tax income has fallen too, from $300,000 in 2011 to about $32,000 this year, according to the township’s budget.
Despite the harsh language of the report, Administrator Pat Ungaro was keen to point out the township’s successes.
“They should be complimenting us,” he said. “Every operation is in the black.”
Ungaro added that the township inherited some financial challenges that it overcame.
“When these trustees started we had $800,000 in bank debt,” Ungaro said, “Now we have no debt at all.”
Halpin said she could not discuss what the next step would be if Liberty’s accounts remain deficient.
“It’s hard to say what will happen next until we get in [there],” she said.
The state said the township misused funds in 2010 by transferring $22,444 from the police fund to pay for the new 911 communications center. The 911 center has since closed because the levy that was passed to pay for it did not draw in enough money to cover costs. The township also took money from the fire fund to pay for police salaries because of a deficit.
Both transfers are against state rules. Halpin said, however, that there is no legal penalty for swapping funds in that manner.
“There wasn’t enough money for the police payroll, so Pat [Ungaro] and John [Fusco] decided, together, to take money from the fire fund and pay the police,” Stoyak said. “You’re not allowed to do that, but he didn’t want to lay off a whole department so we did what we needed to do.”
Fusco added that there was an understanding between now-retired state auditors and the township.
“We’re not allowed to do that, but we had no choice,” Fusco said. “The state auditor told me that they would have done the same thing.
“We had to do it, otherwise we wouldn’t have a police department,” he added.
Halpin said she could not confirm whether or not any previous auditor agreed with the township about swapping money between funds.
The township continues to seek ways to save money.
It has hired Joshua Cleland of Campbell as a full-time firefighter. Nudell said the decision to hire a firefighter for $33,597 per year was more cost-effective because the township was continually incurring overtime expenses with regular firefighters. Last year the department spent $208,000 on overtime pay because two firefighters were injured and one was on extended leave.
“I’m really optimistic that we haven’t been better than we are today,” said Ungaro, who has recently gone down to four work days a week to ease salary expenses.