City ended 2011 with surplus of $326,000
Mayor lauds progress, wants bigger cushion
5/2/2012The city of Toledo squeaked out of 2011 with enough extra cash to fund about a single day of expenses, but officials praised the surplus as a great accomplishment considering the enormous budget hole that existed two years ago.
Mayor Mike Bell announced Tuesday that the city would have a $326,000 surplus from 2011. The accomplishment came with some difficult choices, he said.
"People did not want to have any type of tax increase, and so we played inside that line without having mass layoffs and still being able to provide services that needed to be provided with the funding that we had," Mr. Bell said.
The year-end financial data, which was sent to independent auditors for review, includes 2011 income tax revenue of $153.58 million.
The mayor said that when he took office in 2010 the city was facing a projected $48 million deficit. He said part of the cost-cutting came from negotiations with unions, resulting in concessions.
"The city was not able to achieve this alone. Our unions played a vital role that cannot be overlooked," Mr. Bell said.
Patrick McLean, city finance director, said the good news is tempered by the fact that the city essentially has no financial cushion.
"Being in the black is certainly a tremendous achievement given where we were two short years ago, but we do need to put it in some perspective," he said. "Best practices suggest that we would have a rainy day fund in the neighborhood of some $36 million, or about two months' worth of expenditures. Our reality is that this represents about one day worth of expenditures, so we are not everywhere we want to be."
The city is expecting a balanced budget for 2012.
City officials announced last month that income tax revenues were up nearly 12 percent for the first three months of this year compared with the same period in 2011. From January to March, Toledo collected $25 million in total income taxes, putting the city on track to meet its budgetary goals.
The increase is mainly the result of growing business profits, Mr. Bell said.
Although the city expects a 3 percent growth in income tax revenue for 2012 that will be below pre-recession levels, the city will continue to spend more money than it generates.
To stay afloat, the city will keep taking money from its capital improvements budget, which is used for street repair.
Mr. Bell said he wants to end the reliance on the capital improvements budget but acknowledged it is beneficial to be able to transfer that funding to operations in order to pay for services such as police and fire.
In 2012, the Bell administration plans to allocate $12 million of capital improvements money to the general fund.