XENIA — Members of Xenia City Council Thursday received some potentially good news regarding the city’s cash flow shortage.
During a special session prior to the regular meeting, Finance Director Mark Bazelak hinted that what was once projected to be $1 million deficit in 2016 may be as little as $100,000. It could even end up being a positive figure.
And it could mean city council may be able to avoid job cuts or asking voters for a larger tax levy in November.
“When I had done the projections I had assumed very little growth in income tax collections for 2016, just based on what we had seen over the last couple years,” Bazelak said.
But through April, the city has seen nearly an 11.3 percent increase in income tax collections compared to what was projected to be just 1 percent. That equates to an increase of $450,000 over last year. Add to it that the city is saving approximately $400,000 due to six full time and one part time positions being left vacant and the deficit is almost covered.
Some of the income tax increase can be attributed to House Bill 5, which in the simplest definition changed when tax collections are due to municipalities. Some payments the city wouldn’t normally post until May or later are posting earlier, putting the city ahead of projections.
Before he sounds an all clear, however, Bazelak wants to study May’s income tax collection and expenses.
But even if tax collections begin to lower later in the year — as Bazelak predicts — he is anticipating 4 percent income tax growth over the remainder of 2016, 3 percent higher than projections. That means $313,474 in extra income for the key operating funds. Combine that money with the savings from unfilled positions and lower-than-expected expenditures out of those operating funds and Bazelak is cautiously optimistic.
He anticipates making one of two recommendations to council in early June. One would be to pursue a 3- to 4-mill tax levy to ensure that the vacated positions could be filled next year and to account for potentially lower tax collections next year. The other would be to hold off on a levy since the city would still be above the $3 million threshold for its cash reserve and it doesn’t have to fill all the vacant positions in 2017.
There is also talk of legislation to reinstate the local government funding, which officials have previously said is to blame for the deficit.
“Our hope would be we wouldn’t even need a levy,” Bazelak said.
Contact Scott Halasz at 937-502-4507.