Still on the heels of $48 million in cutbacks for this year, the city of Toledo could be staring at an additional $16 million in red ink for its 2011 general operating fund.
The Bell administration warned City Council of the potential shortfall ahead of a Nov. 15 deadline to prepare a budget for next year.
The deficit would be a combination of reduced income and higher costs, according to a Sept. 11 letter from Mayor Mike Bell. Labor agreements that helped the city through the tough budgets of 2009 and 2010 will become a problem next year, the mayor wrote.
"The labor agreements already in place for our public safety units and AFSCME work force … will result in an increase in wages and benefits totaling $5.2 million over the amount contained in the 2010 budget," he wrote.
The agreements call for a 3.5 percent wage increase for police and fire and a 2 percent increase for AFSCME units beginning in January.
"As part of the midterm negotiations with [Firefighters] Local 92, the Fire Chiefs, and the [Toledo Police Patrolman's Association], the city agreed to defer [overtime] payments due in 2010 to 2011 to address the city's budget crisis," the mayor wrote.
Those deferrals will total $4.52 million next year, according to city estimates.
The Bell administration predicts a $6.36 million decline from several sources of city revenue. They include:
• $3.82 million from the local government fund, which is money from the state.
• $1.2 million from red-light-camera violation fines.
• $500,000 from estate taxes.
• $400,000 from fines, fees, and court costs.
• $240,000 from personal property taxes.
• $200,000 from investment earnings.
Councilman George Sarantou, chairman of council's finance committee, said the mayor's prediction was sobering but not unexpected.
"None of this was a surprise, except the revenue from the local government fund," he said. "I think it's good the administration is putting out these numbers way ahead of time so we are not sitting there Nov. 15 shocked."
Mr. Sarantou said council could exercise its authority to transfer money from the city's capital improvements budgets into to general fund, although he would prefer not to do so.
"We can bear this, but certain factors have to fall into place," he said. "There have to be [city-owned] property sales happening by the end of the year, there has to be growth in the income tax, and we have to see a reduction in overtime for the fire and police departments."
Overtime for the police and fire departments were over budget at the midway point for 2010.
The fire department's overtime costs through June 30 were more than $2.7 million, which is 177 percent of the budgeted amount of $1.56 million.
City Finance Director Patrick McLean said the figure includes $1.2 million in payments to firefighters for 2009 deferred overtime.
Police overtime at the midyear point had cost the city $1.4 million, 66 percent of the 2010 budgeted amount of $2.09 million. That figure includes deferred 2009 overtime payments.
The Bell administration in July announced that halfway through 2010, the city had spent slightly less than half of what was budgeted for the year, which gave council and the administration an optimistic outlook for the city's books.
The 2010 general fund spending budget is $218,465,385. As of June 30, the city had spent $99,374,021, or 45 percent of the annual budgeted amount.
The city's income tax collections have been moving in the wrong direction.
Toledo collected about 1.66 percent less from its income tax in the first six months of 2010 over the corresponding period of 2009.
The city collected about 2.53 percent less from its income tax during the first five months of 2010 over the same five-month period last year, and about 4.4 percent less from its income tax during the first four months of 2010 over the same period in 2009.
When City Council on March 30 approved its 2010 spending plan, it assumed $138.1 million from income taxes.
Total income tax collections for 2009 were $141.5 million; 2008 were $154.4 million. Collections for 2007 were $169.7 million.
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