CINCINNATI -- City officials must approve a balanced budget by July 1, and their task just got a little bit more difficult Monday.
Cincinnati City Council’s budget and finance committee learned the estimated deficit for Fiscal Year 2015 has increased to $22 million, up from $18.5 million predicted a few months ago.
Most of the increase is due to spending related to adding more police officers, along with replenishing the city’s salt stockpile for treating icy roads.
Expenses include $5 million for a new police recruit class; $1.2 million for a police lateral transfer class, where experienced officers are hired from other jurisdictions; $1.3 million to buy more salt and ice control supplies; and $600,000 for police overtime.
Mayor John Cranley and a City Council majority pushed for the police spending last month in reaction to an uptick in shootings and homicides.
Also, the unusually snowy winter has caused city road crews to use more salt than planned.
In fact, preliminary estimates for the city’s Public Services Department are $2.8 million over budget this year – and that doesn’t include spending in other departments that will be billed to Public Services.
Further, the estimate doesn’t include costs for this week’s snow or future weather events before winter is over, or expenses for pothole repair.
The latest budget forecast by the city’s Finance Department indicates municipal government will have $355.4 million in General Fund revenues for Fiscal Year 2015, and $377.4 million in expenditures.
Councilman Chris Seelbach, a Democrat, blamed the city’s budget problems on Gov. John Kasich, a Republican.
Kasich has made steep cuts to the Local Government Fund, which is comprised of state revenues doled out to cities. It consists of portions of the state income and sales taxes.
Before Kasich’s cuts, Cincinnati typically received about $25 million to $27 million annually; that amount was $13.7 million for this year.
Also, the city received $2.2 million from estate taxes. In the past, the amount ranged from $14 million to $21 million annually, before the GOP-controlled state legislature made changes.
“Hopefully, a future governor will restore those cuts,” Seelbach said.
But Councilman Charlie Winburn, a Republican who chairs the committee, said Seelbach should deal with the reality facing the city.
“Yes, that money did disappear,” Winburn said. “We can whine and complain about what the governor did, but we’ve got to fix it.”
Cincinnati’s long-term budget forecast isn’t much better.
At current spending levels, the forecast predicts a $23.2 million deficit in Fiscal Year 2016; a $19.6 million deficit in Fiscal Year 2017; and a $16 million deficit in Fiscal Year 2017.
Unlike the federal government, Ohio cities legally cannot operate at a deficit. That means Cincinnati must either cut spending, increase revenues or some combination of both by July.
Cincinnati has had structurally unbalanced budgets since 2001.
The term means city government spent more in expenses than it took in through revenues. Deficits routinely were avoided during those years by relying on using emergency reserves or one-time sources of money to balance the budget.
For example, the 2011 budget used about $27 million from emergency reserves and borrowing from the workers compensation fund to avoid a deficit.
And the city’s budget for 2012 was only balanced by accepting a $14 million payment from Convergys Corp. in return for allowing it to reduce the number of employees it promised to keep at its downtown location.
The 2013 budget relied on one-time sources of $11.6 million in General Fund carryover money.
During the mayoral campaign last year, Cranley vowed to present City Council with a proposal for a structurally balanced budget this spring.
But it’s council that actually approves a spending plan. Typically, the group makes changes to the proposals submitted by the mayor and city manager.
The city’s General Fund budget pays for daily operating expenses of municipal government.
About 71 percent of the General Fund is derived from the city’s earnings tax, while 7.6 percent comes from property taxes.
Other sources include licenses and permits, fines and penalties, and investments.
The General Fund’s single largest expenditure – personnel costs – account for 81 percent of spending.
For more stories by Kevin Osborne, visit www.wcpo.com/osborne . Follow him on Twitter at @kevinwcpo