City ponders bleak financial future
Budget Year One for Marion’s reconstituted City Council, disdaining past approaches that Mayor Todd Heitschmidt labeled “reactionary,” began with an unprecedented 13-hour work session this past weekend that included visions for both a bright future and a very dim present.
Actively considered by the four council members present were sizeable increases in bills for electric, water, sewer, and trash service — plus a property tax increase, a hiring freeze, and cuts in payments to such things as Chingawassa Days, the Chamber of Commerce, the library, and the Recreation Commission.
With $800,000 in reserves exhausted, a $18,718 shortfall in property tax collections this year and an additional $10,000 reduction in property tax revenue expected next year, council members are considering every “revenue enhancement” possible.
All of this is against a backdrop of the city rapidly approaching, according to Administrator Roger Holter, its state-mandated limit for general obligation borrowing.
With debt costs this year the highest in untold years — likely exceeding total property tax collections by $43,190 — anything and everything was on the table as council members went through the city budget line by line in a marathon session from 8 a.m. to 4 p.m. Saturday in a Central National Bank conference room.
Cash flow in the next two years will be especially challenged by debt repayment and what Councilman Jerry Dieter termed “fancy accounting,” which included in the 2013 budget projected income from a street project but none of its costs.
“It comes together, but it does put a pinch on us for 2014,” Heitschmidt said. “We did was we needed to do. Whether we understood what we were doing….”
The mayor’s voice trailed off, never completing the sentence. Instead, he changed the subject to 2017, by which time debt service will go down.
Holter added even more gravity to the situation, noting that Marion’s economy now has more money flowing out of the community than into it. His comments were a carry-over from a three-hour discussion the night before in council chambers about members’ visions for economic development.
All of this was prelude to detailed presentation of budget requests by each city department, their budgets already trimmed once by Holter and mandated by the council to keep spending below 2012 levels in all departments except police and economic development.
Even with those cuts, what department heads presented remained $70,000 above what was needed to balance the budget.
Although at this time of year it’s commonplace for governmental groups to bemoan how much in cuts they need to make before miraculously arriving at a no-tax-increase budget by August, the atmosphere seemed palpably different.
Without Councilman Jerry Kline, who reportedly was tending to harvest needs, the remaining council members heard that:
- Police Chief Tyler Mermis would rather lose a squad car than one of five full-time and two part-time officers.
Each officer currently has his own vehicle, but Mermis said having a “take-home” vehicle was unprecedented in his experience and unnecessary except for the officer patrolling with the city’s police dog.
Mermis already has limited officers to driving no more than 15 miles a night and switched his hourly-paid officers from 84 hours every two weeks to 80.
In policing such events as Chingawassa Days, officers aren’t billing for their time, he said.
“Guys aren’t putting down their time on their time sheets because they don’t want to be part of the problem,” he said. “They want to be part of the solution. They’re doing this become they love this city. They love where they work.”
Still, Mermis argued for air conditioning repairs in the combination police and fire station (“It’s crazy hot there,” he said.) and for increased security in an evidence holding room (the reason for which seemed known to the council but was only hinted at publicly).
- Despite addition of a fuel cost escalator to residents’ bills, the city’s electric service, profit from which pays twice as much of the city’s budget as property taxes do, already has been hit by a 51 percent increase in wholesale cost of electricity it buys.
The city has absorbed $53,000 in costs not passed on to customers since the first of the year, Holter said.
Meanwhile, electric superintendent Christian Pederson is trying to upgrade lines and transformers because replacement parts aren’t available, all the while keeping up with trimming trees away from power lines.
“If I lose track of that,” Pedersen said, “the whole system goes.”
- The vacant Bown-Corby School, abandoned by Butler Community College, will cost the city $4,000 a year in insurance — part of a economic development budget that, unlike other portions of the city budget, is likely to increase.
Council members seemed quite taken with new economic development director Terry Jones and, rather than suggesting cuts, proposed additional spending in his department.
“It’s exciting to see someone excited,” Councilman Chad Adkins said.
- With the coming budget needing $411,490 to pay down bonds, $27,478 for a state loan, $12,216 for water meters, and $110,192 for equipment lease-purchases, Holter is recommending a two-year moratorium on additional obligation bonds.
“We’re at that point where sometimes you have to slow down to go fast,” he said.
- With no increase for several years, water rates probably should increase, perhaps as much as $6 a month for residences.
“At school several years ago I was told we should increase rates 2 to 3 percent a year every year,” works superintendent Marty Frederickson said. “We’re just like a hot rod spinning our wheels. We’re not building reserves in any of these utility departments.”
The city actually loses $46,000 a year selling water, Frederickson said. However, a rate increase, especially with many residents (including Heitschmidt) complaining of “brown water” from old cast-iron city mains, would be, as Adkins put it, “a hard sell, but it has to be done.”
Even vultures at the water tower above Central Park drew the council’s attention.
“If vultures are shortening the life of the tower,” Heitschmidt said, “we may need to address this as humanely as possible.”
Both water towers, the council heard, need painting.
Other suggestions the council entertained:
- Central Park’s small fountain may need to beredesigned without a pond to save costs and the large fountain may need to be put on a timer.
- The city may have to revisit $2,049 in extra liability insurance it pays for specific Chingawassa Days activities.
- With $3,600 in additional utility costs since a new operations center opened, airport hangar fees may need to be increased, and the city is looking for new contracts that would reduce its $5,500 annual cost for mowing the airport and increase the $135 in rent it receives for crops grown on airport land.
- The USD 408 Sports and Aquatics Center is “not in a cash-producing environment,” raising concerns about what will happen when the city’s $100,000 a year lease payments to the school district end.
- Some Marion Cemetery land might be “repurposed,” as Holter put it, for a retail business serving the ballpark. Dieter warned, however, that graves, not listed on city records, were in the area.
- Heitschmidt asked to “see the financials” for the city recreation commission, and Holter said it was unclear who has jurisdiction over it.
- The city will investigate whether library maintenance, currently a city responsibility, should be transferred to the library’s own separate mill levy. Likewise, it will see whether the $7,500 it contributes to the Chamber of Commerce gets desired results.
- Although a previous administrator did not think going from twice-a-week pickup would save substantial sums, elimination of free bags could save the city $12,500 a year.
- Although the fire department needs no significant new spending, recruitment is a priority with “the average firefighter looking at retirement in the rearview mirror.”
- Although 2 percent pay increases were budgeted for most departments, raises for city employees will not be across-the-board and, as Holter put it, “it will be very difficult to recommend salary increases as a time when we’re expecting revenue reduction.”
In the end, Heitschmidt said, the city faces difficult and possibly unpopular decisions.
“If others have other solutions,” he said, “awesome. Bring ’em to the table.”
Meanwhile, a hiring freeze hinted at over the weekend was officially adopted at Monday’s council meeting. Positions that come open won’t be filled without specific council approval for the next two years.
The first to get caught in the freeze was Frederickson’s department, which earlier in the day had an employee resign. Frederickson no longer is authorized to fill that vacancy without seeking council approval.