When Toledo’s general fund budget is released next week, it will predict a slight bump in income taxes for 2013 and include money to hire police officers and firefighters, the city’s top financial steward said Thursday.
One month later, the city’s capital improvement budget is expected to be released with $20 million in city money and about $12 million from state matching grants to repave or reconstruct 50 lane miles of roads.
Those pieces of good news come with a caveat.
“One of the big stories of our budget is what we are losing,” said Toledo Finance Director Patrick McLean. “And this is the second of two years where our state revenue sources fall off the cliff. Everybody is talking about the fiscal cliff, well we have our own cliff and it’s caused by the state.”
Toledo received more than $21 million from major state sources in 2011, but will get about only about $8 million in 2013. That money came from the local government fund, estate tax, and tangible personal property.
“It is a very direct impact on what we have to do if we want to maintain service levels,” Mr. McLean said.
As it has had to do for years, the Bell administration plans to transfer millions from its capital improvements budget to fund general operating costs, which includes police and fire salaries.
This year, the city used about $11 million of capital improvements money for the general fund and next year it could be up to $13 million, Mr. McLean said.
The Bell administration said it will end 2012 with a $900,000 general fund surplus, but Councilman George Sarantou, chairman of council’s finance committee, has said it is misleading to make that claim because $11 million came from the capital improvements budget.
Mr. McLean has consistently said the city did a good job sticking to the 2012 budget since it was approved early this year. The 2012 general fund budget predicted $238.9 million from all revenues, but the city is on track to bring in $241.5 million. Among that is $2.4 million expected from shared revenues from red light cameras while the city had predicted $1.29 million. Other predictions fell short, including $530,000 that was supposed to come from the sale of fixed assets. The Bell administration now expects to close out 2012 with $30,000 in sales.
The city’s 2.25 percent income tax, which is married to employment levels, is the largest source of revenue for the city.
Income taxes for the city were nearly $106.5 million collected through the end of September, which is 5 percent greater than the same time last year.
Mr. McLean estimated the city will collect between $163 million and $164 million from incomes taxes in 2013, up from the $158 million or $159 million expected to be collected by the end of 2012.
“It is less than robust but it is better than anemic. It represents slow, steady progress,” he said.
University of Toledo professors David Black and Oleg Smirnov were hired by Toledo City Council to make a revenue forecast. The pair gave council two income tax collection predictions in an Oct. 25 report: the first forecasted figure being rosy at $168.3 million, the second a little more dire at $158.4 million in 2013.
Spending will be up next year over 2012 — chiefly because of salary increases. Most of the city’s union contracts promise raises and many nonunion employees were given pay increases by Mayor Mike Bell.
The mayor added $295,000 to the city’s 2013 budget last month when he raised salaries for 55 nonunion city employees. The raises included all three deputy mayors — Steve Herwat and Shirley Green, whose salaries increase from $90,002 to $92,500, and Paul Syring, whose salary increases from $85,001 to $92,500. The raises also included nine city directors who were paid between $76,500 and $90,000. They all are be paid now $92,000.
The union raises were to offset eliminating pension plan contributions in 2010, Mr. McLean said.
Overall general fund spending will increase to about $243 million in 2013, up from about $239 million in 2012, Mr. McLean said.
The general fund budget is due Nov. 15 but Mr. Bell said it would be released Monday.
Contact Ignazio Messina at: email@example.com or 419-724-6171.
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