The estimated 14.6 percent dip in reserves would be the largest since 2004, when city funds declined almost 19 percent.
Kettering’s balance jumped 44 percent in 2007 and almost 26 percent in 2008 due to a one-year estate tax windfall of more than $5 million and a hike in the city income tax.
Neither of those revenue pools will be available in the future.
The statewide estate tax will end in 2013 and city officials have pledged not to seek an income tax hike during their current terms.
Reserves will decline an estimated 3.13 percent in 2012. City manager Mark Schwieterman said it has helped “that many of our departments continue to underspend on their budgets. Despite the economic decline in 2008, we’ve been holding our own in 2009, ‘10, ‘11 and ‘12.”
Mayor Don Patterson said the city will have to tighten operations. “We can’t can’t continue to take $5.8 million out of the fund balance for very long.”
About 99 percent of estate tax revenue — an average of about $3 million a year — has been devoted to the capital fund. There is no source on the horizon to replace that.
Council and city staff will have another budget workshop on Dec. 4. The vote on 2013 appropriations is scheduled for the final city council meeting of the year, on Dec. 18.
The city’s reserves, which reached a peak of $41 million in 2011, have given Kettering considerable budget flexibility that will dwindle gradually, based on forecasts.
Total revenue for 2012 will be about $74 million, down from $81 million in 2011. The 2013 total is expected to be $69 million.
The city’s 2.25 percent income tax will bring in a growing percentage of that — 57 percent, or a total of $39.7 million — as other sources decline. The income tax provided 47.6 percent of income in 2010.
Recent and upcoming revenue losses “will leave the city about where it stood before the income tax rate hike,” which brought in $8 million, said city council member Ashley Webb.
Council member Tony Klepacz said he’s concerned about proposed legislation on the state level to make local income taxes uniform, and where that may eventually lead.
“What’s the next thing coming down the pike — a uniform tax rate? We can only live off that balance so long,” he said.
Vice mayor Amy Schrimpf said, “A lot of people have the idea that all Kettering does is spend, spend, spend. That’s not true. We need to educate our residents about what’s coming.”
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