BY Jordan Cohen
Pressure on the general fund due to shrinking revenue and declining interest on city funds has led council to request a performance audit from Ohio Auditor Dave Yost.
According to Robert Marino, council president, the revenue shortfall has caused the general fund to drop from $9 million several years ago to a projected balance of $3 million for the next fiscal year.
“I’m concerned about deficit spending,” Marino told council. “We need to take a proactive step to protect our city finances.”
The loss of revenue from two major sources is sizeable. Mayor Ralph Infante said the city’s income tax collections have dropped by $400,000 while local government funding from the state has been “cut in half” from its previous level of $350,000.
The mayor said the city is getting hurt the most, however, by minimal interest on its funds.
“In 2008, we earned $1.5 million interest on our unencumbered funds, but last year, all we got was $25,000,” Infante said.
Infante cited a number of austerity measures he has taken in the past three years including closing the city jail, which saved the city $40,000 annually, and leaving 21 city positions unfilled. The mayor said he is asking for help from the courts and the city’s unions to help further reduce the cash shortfall.
“The police and fire departments alone cost us $7 million a year, but the income tax only brings in $5.7 million,” the mayor said. “Hospitalization costs us $4 million each year, and we’ll have to increase the co-pays.”
In a performance audit, the state would conduct a thorough review of all costs and expenses and recommend ways to reduce them. That was the case last week when Yost released the results of a performance audit for Niles schools, which recommended that the school board eliminate 15 jobs and more than double the rate of employee hospitalization premium co-pays.
Infante said the state audit will cost $92,000, but he plans to apply for a grant that he hopes will “cover most of it.” The mayor said he has been informed by the state that the audit could not begin until June.
Marino described the state of the general fund as “relatively healthy” but warned it could change.
“If we do nothing, the naysayers will call us to account,” he said.
Council unanimously approved the audit resolution although several questioned its cost.
“We’re bare bones and we just need to get more creative than we are now,” said Steve Papalas, council finance chairman.