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Report: Ohio cities facing fiscal stress despite improving economy

On list of troubled cities, Springfield says finances ‘significantly improving.’

All Ohio cities and counties are experiencing heightened fiscal stress, according to a report from Ohio Auditor of State Dave Yost, but Springfield, Riverside, Lebanon and Cincinnati were included on a list of 13 cities that Yost said were a step away from facing increased financial risk.

In addition, the report named nine cities and one county across Ohio showing signs of fiscal stress in 2016, the most recent year full information is available. None of those were in the Miami Valley, but nearly two-thirds of Ohio’s governments had more “critical” or “cautionary” warnings than the year before. The same is true of 45 percent of the 247 cities surveyed.

The report looked at 17 indicators — such as tax revenue changes, expenses and available reserves — to create what Yost calls a “fiscal physical” that residents and leaders can use to seek corrective action and avoid financial woes.

RELATED: Ohio auditor: Springfield under fiscal stress

“(It’s) an early warning system that can point the way when a city and county are going into an area where there are going to be troubled waters,” he said.

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Springfield, Riverside, Lebanon and Cincinnati are a “single indicator away from facing an elevated state of fiscal stress,” according to the report.

Yost expressed concern that fiscal stress was increasing in so many governments while the economy is improving.

“We are in decent — not great — but decent economic times,” he said “To see stress increasing at a time of relative prosperity is disquieting.”

FULL REPORT AVAILABLE HERE

Riverside: Operating at a deficit

Riverside finance director Tom Garrett said the city’s revenues have not kept up with expenses in recent years. Its $27.4 million budget calls for spending about $1.5 million more than it is taking in this year and $2 million more next year.

The city is running out of money to cover that difference, Garrett said. Possible solutions include replacing old tax levies, creating a street repair levy or storm water assessment, or looking to increase income taxes.

“We haven’t made any financial decisions on those yet but we clearly do need to scare up a little more money,” he said.

Yost said spending that exceeds annual revenues was one of the indicators that commonly caused the greatest challenge for cities and counties.

RELATED: Lebanon latest city to cut income tax credit

“If you’re upside down, that’s a bad sign. If you’re upside down for several years …. you’re deficit spending,” he said.

Springfield: ‘Significantly improving’

Though Yost’s report says Springfield was one indicator away from trouble in 2016, its financial health improved from 2015 and will improve more this year, according to finance director Mark Beckdahl.

City voters in May passed a 0.4 percent income tax increase that is expected to generate $3.1 million this year and $6.2 million next year. Much of it is committed to street paving and hiring additional police. The city has a $192.9 million budget and had a deficit of roughly $84,000 last year.

“(The tax increase) has changed the trajectory of the financial health of the city dramatically,” he said. “I would characterize the city’s financial health as improving at this point — significantly improving.”

RELATED: Springfield to restore cuts to court budget

Beckdahl said the city’s financial health slipped largely because state lawmakers cut local government funding and rolled back other revenue sources such as the estate tax. Beckdahl said these amounted to a $5 million hit to the city’s coffers.

One Democratic state lawmaker last week blasted a budget boost he says was given to Ohio counties and transit authorities on the heels of Yost’s report, saying it is “too little, too late from Columbus.”

“Last minute lawmaking won’t make up for the seven years and over two-billion dollars in cuts to local programs and services that taxpayers and businesses rely on,” said Rep. Jack Cera, D-Bellaire.

Cera said the amendment to an unrelated bill would divide $50 million between 88 counties and eight regional transit authorities, with more funding possible if the state’s budget runs a surplus.

Lebanon: Steps taken

Lebanon city auditor Dan Burke said that city’s council has also taken steps to shore up its $97.5 million budget. He said the city has retired a lot of debt in previous years and this year cut in half the amount of credit residents get for taxes paid for working in other jurisdictions. That change is expected to bring in $800,000 a year, much of which will be used for road repair.

“The city’s finances appear to be in excellent condition,” Burke said.

RELATED: State cuts sting Ohio localities

Yost said Ohio’s cities and counties are “generally well-managed.”

“Unfortunately, those leaders sometimes are challenged by financial factors beyond their control: A major employer downsizing or relocating, or reductions in federal or state funding,” he said.

“They’re working hard to be good financial stewards, but it’s clear there is elevated financial stress in many of our local governments.”

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