Toledo city council approved yesterday a 2001 operating budget that predicts minimal revenue growth for the city this year but includes a $12.8 million rainy day fund.
The $399 million spending plan projects income growth of just 1.4 percent, due to the downturn of the nation's economy and a drop in city tax collections at the end of last year.
Despite the lean predictions, the budget reflects a growth in the city's budget stabilization reserve of $2.7 million over last year. Of that amount, $1.9 million was put into the fund at the end of last year from money left over from the 2000 spending plan. The remainder of the fund's growth was from interest income.
City council established the fund 12 years ago, but officials only got serious about putting money into the reserve five years ago, Finance Director John Bibish said.
He said even with the relatively bleak financial forecast, continuing to beef up the fund is necessary. He likened the situation to a homeowner putting money away for an unexpected expense, even though he must carefully budget the money he spends on groceries.
Council President Peter Ujvagi stressed the importance of the reserve and noted how when the city sought bond ratings from New York investment houses last year, officials favorably noted the cash reserve and suggested it be even larger.
Council adjourned yesterday's meeting to an executive session for more than an hour to get advice from city attorneys on two issues - a lawsuit against Maumee regarding a 1991 Joint Economic Development Zone agreement and The Hoop project.
Toledo sued Maumee in 1999 for income tax money from Toledo-owned land in Monclova Township. The city claims it is due the money under the terms of a 1991 agreement with Maumee.
Regarding The Hoop, council sought legal advice on whether the city was liable for all of the cost overruns from the project.
Council acted on two ordinances to pay for some of the more than $180,000 of cost overruns from the 24-hour basketball facility under construction on city land at Manhattan Boulevard and Counter Street. Council agreed to pay $55,680 for the removal of more than 100 contaminated barrels found at the site and gave first reading to a request to allocate $35,000 to pay for the disposal of the barrels.
In the executive session, council consulted with its attorneys over whether it is liable for the remaining $93,400 of the costs. Council intends to hold a hearing on the matter.
In other action, council:
The move had been delayed for weeks while officials tried to determine whether the bank complies with the city's living wage law.
The law requires companies that do business with the city to pay their employees a living wage, a figure set at $9.01 an hour. The bank could not guarantee all of its employees are being paid the amount.
John Madigan, the city's general counsel, said an agreement was reached with the bank after some clarification of what the law requires.
He said the ordinance does not say all of a company's employees must be paid the living wage, just those “directly working under the city contract.”
As a result, the bank was able to guarantee those employees working under the city's contract are being paid the living wage, Mr. Madigan said.