Fostoria council explores budget proposal
FOSTORIA — Fostoria council members reviewed a draft of a five-year fiscal recovery plan Tuesday evening that forecasts the city will be in the black by the end of 2019.
The city was placed under fiscal emergency in May 2016 because of a substantial deficit. For the time being, the city is monitored by the Financial Planning and Supervision Commission. That panel was formed by the state auditor to bring Fostoria out of fiscal crisis — meaning it has enough funds on hand to operate for three months.
Council and the commission, comprised of representatives of state and local government and Fostoria residents, are mandated by the state to approve a five-year fiscal recovery plan annually. The city budget is to mirror the plan.
Dec. 18, council approved temporary appropriations for the first quarter of 2018 to allow the entities more time to work on the plan.
Belinda Miller, a representative from State Auditor Dave Yost’s office, said during a work session Tuesday that she and her staff had been working with the city on the plan since August.
She said income tax revenue projections are based on what was collected in 2017. She said the plan builds in “conservative” 2-percent annual increase.
Miller said the city began 2018 with a $1 million deficit in the General Fund, but she believes the deficit could be erased by the end of 2019.
“It’s a pretty big deal for the city,” she said of the projections.
Councilman Greg Cassidy asked Miller how the real numbers compared to what was projected in the recovery plan approved last year.
Miller said the General Fund deficit was about $43,000 higher than what was projected for the start of 2018, but she said it should not alarm city officials since it was off by less than 1 percent.
“We’re still pretty on target,” she said.
Miller said income tax figures for 2017 were encouraging compared to 2016. The city collected about $5.3 million last year compared to $4.5 million in 2016.
City Finance Director Steve Garner said about $250,000 of the increase could be attributed to the city removing half of tax reciprocity, a tax credit that allows people who live in one municipality but work in another to be credited for taxes they pay where they work. Reciprocity is to be eliminated this year.
Garner said it is difficult to compare 2016 and 2017 figures due to a bookkeeping anomaly tied to Fostoria’s hiring of Regional Income Tax Agency. RITA was hired in May 2016 to help collect unpaid taxes.
He said in 2016, one month of income tax collections were reported as just $8,000, because of a transition to RITA reporting the tax revenue.
According to Tuesday’s draft of the plan, the projected General Fund deficit at the end of 2018 is $320,708 and that is expected to be a surplus of $141,212 by the end of 2019. The plan forecasts the surplus to increase to about $362,765 by the end of 2020 and $368,085 by the end of 2021 before falling to $178,468 at the end of 2022.
The proposal does not appear to meet the Ohio Revised Code requirement of forecasting a three-month carryover in all funds at the end of the five-year period.
This is in part because of decreased income tax revenue projections compared to the 2017 plan.
Miller said the plan is to create a 2018 budget and it shows the city is working to eliminate deficit balances.
She said it also is used as a planning tool for city departments.
“It forces departments to do a little more planning for projects coming in future years,” she said.
Miller said if city officials reviewed the proposed plan in 2022, they may see a big difference in the projections versus reality.
“We’re taking a pretty broad shot in the dark,” she said of the projections, adding the focus should be on this year. “It’s all you can do with this forecast.”
Projections were given a boost by the November approval of a 6-mill property tax levy to fund safety services.
The first reading of the five-year fiscal recovery plan is scheduled for Tuesday, while the second reading is to occur Feb. 6 and the third reading and vote is planned for Feb. 13. If council approves the plan, it must be approved by the planning and supervision committee to take effect.
In other news, Logan Shackelford, a 20-year-old Bowling Green State University student, applied for the vacant Third Ward Council seat.
Seneca County Board of Elections Director Jim Ehrman recommended Shackelford for the seat.
Mayor Eric Keckler said two other applications had been received. He said the applicants are to speak to council before the group elects a new member.