City must use capital, rainy day funds to balance $282 million operating budget
Structural deficit will persist without income tax increase, officials said.
By Sarah Elms / The Blade
Tue, 03 Dec 2019 16:00:45 GMT
While city officials are predicting another year of record income tax collections in 2020, it won’t be enough to cover a projected $15 million structural deficit in the city’s $281.8 million operating budget.
To bridge the gap, Mayor Wade Kapszukiewicz plans to take about $8 million from the capital improvement fund and $7 million from the city’s rainy day fund. It’s a budget-balancing tactic city council has tried to get away from, but one that city officials said is necessary given the city’s financial constraints headed into 2020.
“We are doing everything we can to stabilize resources, to stabilize services, to stabilize our funding sources, but it can only go as far as the funds that are available,” Finance Director Tom Skrobola said.
The Kapszukiewicz administration outlined its 2020 budget proposal in front of city council in a two-hour meeting Tuesday. The proposed operating budget is up about $12 million from 2019’s amended operating budget of $269.7 million. It predicts income tax collection of about $190.6 million.
The spending plan allocates funding for a 40-member police class to begin in May and a 50-member fire and rescue class to begin in December of 2020. It also sets aside money to fill potholes and puts the city on track to convert its 28,000 streetlights to light emitting diodes, or LED, by December of 2021.
The mayor’s proposal does not take into account additional revenue that could be coming the city’s way mid-2020, should Toledo voters approve an increase to the city’s temporary income tax rate from 0.75 percent to 1.25 percent for 10 years.
City Councilman Tom Waniewski, who chaired the budget hearing, was unhappy to see the general fund balance — also referred to as the rainy day fund — is projected to drop from $35 million at the beginning of 2019 to about $17 million at the end of 2020.
“We’re trying to build that fund account,” he said.
Mr. Skrobola noted a fund balance of about $17 million puts the city back to where it was when Mr. Kapszukiewicz took office. He also said expenditures increased in part because of a push to grow the police force.
He added that without the increased income tax levy the mayor is calling for, the city likely will have to continue transferring money from the capital fund to the general fund, to the tune of $16.5 million annually.
“Absent some larger solution to our resources, we’re probably going to have to keep robbing Peter to pay Paul to make the general fund balance,” he said.
The Kapszukiewicz administration broke up its operating budget proposal by five strategic priorities by which to guide expenditures: workplace culture, customer service, basic services, quality investment, and environment.
Council members on Tuesday zeroed in on workplace culture.
Katy Crosby, the mayor’s chief of staff, said an employee engagement survey conducted in 2018 found concerns regarding favoritism and discrimination, and the administration wants to ensure they have adequate staff to address those issues.
The administration plans to fund an additional position in the office of diversity and inclusion and three more positions in human resources, one of which will be a training and development manager.
Councilman Yvonne Harper challenged the administration to ensure its diversity and inclusion training is serious enough to create a culture change. She said often employees receive training, yet discrimination in the workplace persists.
The administration set benchmarks to show they’re moving the needle.
They aim to increase the amount of construction contracts that go to minority businesses from 7.6 percent in 2018 to 20 percent in 2020; decrease the number of employee complaints to the Ohio Civil Rights Commission; and increase the percentage of employees who would recommend the city as an employer from 60 percent in 2018 to 80 percent in 2020.
“We do know that we have a lot of issues in the workplace around trust with diversity and inclusion. That was very clear in the employee engagement survey,” Ms. Crosby said. “We are seeing some changes where departments are feeling more comfortable in reporting complaints around discriminatory behavior and unfair treatment, and we’re being more consistent in how we actually investigate those cases.”
City Council was unable to get through the entire budget proposal on Tuesday, so they plan to hold another committee meeting on the topic at 1:30 p.m. Monday. They must vote on the spending plan before April 1.