As a nation we have always been resilient and our people have always collaborated to do what is necessary to ensure prosperity in our country and the world. We are doing just that as a City government as well by making do with what we have. Recovery from the virus and its negative economic effect has been slow but we will continue to move in a positive direction. We “keep the faith” in our federal, state and local governments. We may not always agree on how we are going to get there, but we believe that in the end all levels of government will succeed. Government must remember that it represents the people. Elected officials take an oath to faithfully, honestly and impartially govern by respecting the will of the people. We must not forget that government is “of the people” and therefore elected officials should represent the people’s best interests. We as a City are taking a positive approach. If our department heads, our elected officials or I can be of any assistance to you we are available. Feel free to contact any of us.
Budget and Staffing
This Administration has been fortunate to have a fine staff of employees and volunteers. During the past five years we have had a hiring freeze during which those who leave the City’s employment by retiring or for any other reason, have not been replaced by new hires. Consequently we reached what we determined to be a minimum staff. The duties and responsibilities of those who have gone have been shared by the remaining staff. This has reduced the City’s expenditures by over $1,300,000. In 2012 through 2017 we found it necessary to hire police officer replacements as we fell below adequate staffing. We also added three firefighter/paramedics because of retirements that caused that employee number to be below what was necessary to fill our shifts at minimal level. In the year 2011, our employees, including the OPBA Union (police), had agreed again to no increase in wages and benefits. This was the second consecutive year and we truly appreciate the employees agreeing with a budget that does not include an increase in wages. Therefore our cost for wages and benefits only increased for those who are automatically increased due to their length of service. Then in 2013-2014 wage increases were 1.5% respectively and in 2015, a zero percent increase and a 1% increase in 2016. This has saved the City hundreds of thousands of dollars but just as significant is that our City staff is providing the same level of services with less people and pay raises averaging 1% per year over 4 years. In 2017 and again in 2018 and 2019, 2% raises were given to our employees including our police. In 2020 it was 2%, 2021 will be 2.5%, and 2022 will be 2.75%. A new contract will be negotiated in 2022 for 2023 or added years.
Income Tax Revenue
In 2013 we received our largest collection of income taxes in our history at that point. At the same time, we experienced major decreases in local government funding because of the elimination of the Estate Tax and the CAT Tax. We finished the year 2014 with income tax revenue about 5% less because of refunds of 2013 taxes and a non-repeat of major corporate bonuses that were given in 2013. As we entered the year 2015, our budget predicted flat revenues but we were optimistic that Economic Development agreements in 2014 would provide additional revenue although we did not reflect this in our anticipated revenue. The major loss in revenue was first realized in the year 2011 as a result of the Veterans Administration hospital complex closing. Therefore we had a concern about what our anticipated revenue would be for 2011 and on into the years 2012 and 13. In the years 2010-12 the City’s income tax withholding held its own as new jobs were added in the community through our Economic Development Program. Our Finance Director instructed City Council that we should be guarded until such time as we fully realized the impact of the reduced revenue from the VA Hospital versus the new jobs that had been created in those past years. An additional concern was a new county government structure and a new administration in Columbus.
Two predictions were made. First that the municipal shares of funds from the county and state would continue to decrease placing a further burden on our General Fund collections and our future budget. And second, that limited interest income and a reduction in profit tax would create a very guarded and very conservative atmosphere when we considered our budgets beyond 2011. Unfortunately both predictions came true, but our Economic Development program made up for much of this loss along with maintaining minimal staffing and conservative spending increases including wages and benefits.
In December of 2014, City Council decreased the 100% Income Tax Credit by .25%. These added dollars were designated in part to fund our Fire Department. The existing 3.4 mill Charter property tax of 1983 no longer adequately provided the dollars needed to maintain the level of service the department was known for. Also included in these funds was the expansion of recreational facilities at the Blossom Hill facility and the Community Center. Rather than proposing an increase in property taxes to augment the Fire Charter millage, the Mayor believed future economic growth and a return of the housing market were in our future. This quarter percent tax credit decrease also provided temporary funds for the construction of added facilities, primarily the Blossom Fieldhouse which will be a part of the new elementary school, an addition to the Community Center’s Jack A. Hruby Natatorium and the construction of a new, exciting, kid friendly outdoor aquatics park. In discussions with City Council and in reaching a compromise, the Mayor recommended a ten-year period with a “sunset” after the 10th year, then going back to a full 100% credit. An alternative plan called for reaching and sustaining for three years an income tax collection of $18 million per year or greater. The decrease in credit, which increased revenues, was adopted by Council in a four-to-three vote. The good news is that we have reached that three-year threshold and the sunset will conclude at this year’s end, 2020. Therefore, the income tax credit will return to 100% effective January, 2021. This is four years earlier than originally anticipated and is a tribute to the City’s outstanding economic development program and the growth of many of our fine companies within our City. Because of the Covid-19 pandemic the City has experienced a decrease in revenue and at budget time a discussion was held to decide whether or not consideration should be given to extending the income tax credit reduction. The Mayor recommended and Council unanimously agreed to balance the budget in other ways rather than revise the original intent of the ordinance. In 2019 we reached over $19,000,000, the highest in our history and ended the year with a general fund balance over $9 million dollars. And there’s more good news, we remain in the lower third of Cuyahoga County communities in property taxes after 33 years of no property tax increases. Brecksville still maintains the highest bond rating for a city of our size. In the early 90s we were ranked in the upper third for property taxes in the county. As we begin 2021 and realize the true impact of COVID-19 in the year 2020, we saw our income tax collection reduced by nearly $400,000, but that was far less than anticipated. Our income tax collections held to an amount above $18 Million. Our future is bright with the onset of the development of Valor Acres where the Sherwin-Williams Research and Development Center will be constructed in the next few years. The City acquired the former VA Hospital site (103 acres) for one dollar! The development will be under an agreement between the City and the DiGeronimo Companies who accepted the responsibility to remove all 1 million sq. ft. of buildings and remove all hazardous or asbestos environmental materials from the property at their cost. The Mayor represented the City and negotiated both agreements with City Council approval. There will be many unknowns in 2021 because of the ongoing COVID pandemic. The City has seen a major reduction in its fees and nontax income revenue. As a result we proposed and City Council adopted a 2021 budget with nearly $3 million dollars in reductions. We are operating with a “worst case” scenario and will see adjustments to our budget during the year 2021. An end to or the control of COVID-19 will do much to improve our financial condition. Fortunately for our City we have many strong companies within the City who have made great progress in maintaining their financials. Our Economic Development program continued strong and we projected income tax revenues to be $21,000,000 in 2021 and 2022.