The city is projecting up to a $1 million deficit next year as a result of increasing municipal court costs and state budget cuts, according to Xenia City Manager Brent Merriman.
The city council will have a special meeting tonight to discuss the 2016 budget and options for reducing the expected deficit.
The council is expected to vote on the budget at the second meeting in January or the first meeting in February.
The anticipated cash flow deficit projected for 2016 — between $723,794 and $1 million — is higher than the deficit this year of $385,000, according to the city finance department.
“We do have some decisions to make given some projections for a stagnation of our economic resources, and the reality is we can’t sustain our current revenue amounts,” Merriman said. ” We can’t sustain spending at that level.”
In addition to state funding reductions, the city municipal court also poses a financial challenge for the city. The court’s operations are funded with money received from fines, however, the fines do not cover all operating expenses.
“So where a few years ago we may have subsidized them $100,000 or $200,00, at the end of this year we’re subsidizing our municipal court well in excess of $500,000,” Merriman said.
Overall, projected city expenses for next year are around $51 million, which marks a $10 million reduction compared to the previous year, according to city documents. The city is not making significant cuts. Staff attribute the significant reduction to one-time costs associated the city administration building project this year.
“If you look at it from a personnel perspective and from a service delivery perspective, we are moving into 2016 pretty much on par with we were in 2015,” Merriman said.
Despite the budget deficit, the city has managed to maintain or exceed the required $3 million reserve funds, according to the city finance department. Last year the reserves exceeded $4.2 million.
“We know that we have a projected deficit for next year, but we are committed to maintain our reserve,” said Xenia Finance Director Mark Bazelak. “So we are going to look at these options tomorrow night to go forward not only for next year but into the future, to make sure that we start to turn that around so that the projections start to be positive rather than negative … We are going to address the issue, but we are still in a sound financial position.”