Councilman Tim Guzman said the village cannot continue borrowing as it has.
As a committee continues working on ideas to bring in more money to the village of Waterville's coffers, Councilman Tim Guzman is asking people who have suggestions for spending cuts to come forward.
"If you've got some ideas, bring them out," Mr. Guzman said during council's meeting last week.
He is chairman of the Tax Alternative and Revenue Enhancement Committee that council created about three months ago.
Some residents have bristled in recent weeks over council's creation of a committee that is looking at ways to raise taxes or introduce fees to help shore up the general fund, and more than a few taxpayers want council instead to consider ways to reduce spending.
It might not be possible to come up with enough cuts, some officials said, particularly considering new numbers provided by Mr. Guzman who, just a few weeks ago, mentioned $170,000 upwards as the possible 2011 budget gap. Now, that number has swelled to $426,000, and the village is "not going to cut $426,000," he said.
Mr. Guzman said the village cannot continue to borrow as it has. Some of that "borrowing" has been in the form of money diverted from the capital budget into the general fund. When money is diverted from the capital budget, it shorts funds that could be used to purchase police cars, for instance.
Mr. Guzman's latest figure adds up $172,000 diverted from the five-year capital budget to cover general fund expenses this year; $69,000 in franchise fees diverted from parks; $85,000 reduction in income tax revenue, and $100,000 to bolster the general fund's end-of-the-year carryover balance.
A higher carryover balance is needed to get a good bond rating, Mr. Guzman said, pointing out the village could have had a 2.7 percent interest rate on a recent note if its cash balance had been higher.
Council recently consolidated seven bond anticipation note ordinances into a single issue of about $3.6 million to cover money borrowed for major capital improvement projects and big-ticket purchases, including $1.3 million for public infrastructure improvements, $536,519 for fire equipment, $110,000 for a parking lot, $429,191 for street and waterline improvements, $870,481 for downtown revitalization, $225,378 for water-tower restoration, and $104,479 for the fire department rescue squad.
The new note was issued at a 3 percent interest rate, down from 3.5 percent last year, said Dale Knepper, Waterville's finance director.
With stronger finances, the village possibly could have obtained the 2.7 percent rate, but its average monthly balance is below the recommended $250,000. "Our carryover is $100,000 to $150,000 less than that," Mr. Knepper said in an interview after the meeting.
He said Waterville pays a bit higher interest because purchasers of the note consider the village to have a weak general fund balance.
The difference in interest rates costs the village $10,300 a year, he said, and that amount is significant when the village borrows year after year. "That is one of the reasons we are working to shore up our general fund balance," he said.
Council tries to set aside enough to cover capital improvement projects, but "there is a need for borrowing sometimes," he said.
Waterville is paying down $266,067 of 2009 principal for past projects but is adding $340,000 of principal in the 2010 issue for the latest downtown revitalization project.
This means the new note issue is an increase of about $74,000 from the 2009 retiring issue.
In other action last week, council approved spending $11,225 to conduct a cost of community services study to obtain information in advance of a comprehensive plan update.
Councilman Jim Valtin questioned the value of such an expenditure, but Mr. Guzman said the village, in a critical time with the new U.S. 24 bypass coming on board and with the economy the way it is, needs to transform itself a little bit. It's tough to pay the bills now, and the village needs some commercial and business park development, he said.
The village needs to know what the costs will be for such development, he said, and the study would provide "real helpful information especially as this whole area changes."
Councilman John Gouttiere said he's not keen on spending $11,000 right now, but he sees the expenditure as an investment.
Council agreed unanimously to spend the money for the study, hiring Randall Gross/Development Economics of Washington, D.C.
In a separate matter, Mr. Gouttiere cast the lone no vote on a motion involving a request from Waterville resident Chris Camp for permission to use the village's trademarked logo - "Waterville, Ohio on the banks of history" - to produce customized designs for gifts and products he makes and sells.
Mr. Gouttiere suggested the village receive some royalty from the sale of the products, and dissented when council voted to prepare a license for the use of the logo by Mr. Camp with no fee or royalty.