City looking at $1.5 million shortfall

The economic woes hitting communities all over central Ohio and the nation have not passed by the city of London.

As city council considers the budget for 2009, they face what Councilman Bill Beathard calls a “bleak outlook.” Mayor David Eades further said, “We’re no worse off than anyone else. Nobody’s in good shape.”

City department heads recently told council they need more funding, but it appears the money may not be there. The city’s general fund faces a significant shortfall in the upcoming budget; the city is already using reserve money to cover this year’s expenses.
 
City Auditor James Slagle said the estimated income for the general fund next year is $3.3 million, and the estimated expenses are $4.8 million, so city leaders need to come up with a way to deal with the $1.5 million difference.  
 
Although the city has used some of its savings this year to make ends meet, they won’t be able to solve next year’s budget woes with savings alone. 

“There’s always an option to use a little bit of it, but you can’t use it all,” Slagle said. “You have to have reserves.”

Various factors have contributed to the problem. One big factor, Slagle said, is the economy. Hard times affect a city, as well as individuals. Income taxes, he said, are the biggest source of income for the city.
 
“If people are losing their jobs, they’re obviously not going to be paying as much in taxes as they have been.”

Another problem is that interest rates have been greatly reduced, he said, which has reduced the income the city gets from interest on its savings.

“Also, expenses are up,” Slagle said. He cited increases in fuel cost and utilities. The city also faces a 54 percent increase in health insurance costs.
 
“The city’s no different than individuals and their households…When you’re expenses are up, you have to kind of cut back and get your income to match what your expenses are.”

To make those decisions, “Everybody in the city is pulling together—the department heads, the administration, council, finance committee,” Beathard said.

At this point, nothing is decided, he said, as far as what will be done.

“We’re going to have each department head tell us what they can live without, where we can cut, in each budget. We haven’t taken anything off the table.”

They will also try to find other ways to make ends meet.
 
“There are two sides to the budget, the income side and the expense side,” Beathard said. “We’re trying to figure out ways to increase income. We’ve been talking about a storm water utility. If that ever gets off the ground, that will increase revenue for us and take stress off the budget.”

Some options, like raising income taxes, might be long-term solutions, but Beathard said they wouldn’t help with next years’ budget because they wouldn’t take effect right away. 
Council needs to vote on the budget by their last meeting of the year, Beathard said, which is Dec. 18. 

“We may have to have a couple of special meetings,” he said.

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