July 31, 2013
DELPHOS — Because of a chain of all bad events, the city is facing shortfalls in its General Fund, Water Fund and Wastewater Fund, and is considering cuts and asking for an income tax increase to make up the difference.
City Council will take a final vote Monday that if passed would put an issue on the November ballot. The city would ask voters to increase the income tax from 1.5 percent to 1.75 percent, which would increase revenue by an estimated $400,000. The council has also begun to discuss with the administration options for cuts.
The city is looking at a General Fund shortage of $266,000; a $315,000 shortage in the Water Fund and a $550,000 shortage in the Wastewater Fund. The city is also facing debt service obligations in the millions for state-required capital improvements made to the water and wastewater systems.
“It’s not one event that caused this,” Safety Service Director Greg Berquist said. “It’s a chain of events that all were bad.”
The city has lost nearly $200,000 in Local Government Funding from the state, which took the money from communities to balance its budget. Also, the state eliminated the estate tax that had provided an estimated $70,000 of annual revenue for the city.
In 2012, major employer Chef Solutions declared bankruptcy, owing $400,000 to the city’s Water and Wastewater funds. Also in 2012, I&K Distributors was sold to Lapari Foods, which closed the plant and caused a loss of 124 jobs equalling $60,000 in lost income tax revenue. Most recently, Reser’s Fine Foods also announced it would close, adding another 100 lost jobs, income tax revenue and large payments to the water and wastewater system.
During a special council meeting Tuesday, residents expressed anger that city officials haven’t announced more cuts before asking residents to pay more and planning for utility rate increases.
Councilors expressed their hesitancy with even posing the question of a tax increase.
“If we say yes, it goes to the public, but from the comments I hear, it won’t pass,” 2nd Ward Councilor Jim Fortnener said. “If we don’t, it’s like kicking the can.”
Berquist had just Monday provided a list of possible cuts to the council. Berquist described the list as a menu, and said he was providing information that was requested by the council. The list includes layoffs of police, firefighters, recreation, water and wastewater staff; furlough days and increased employee health insurance premiums.
By law, the council can supplement the utility funds with General Fund money, but cannot put utility fund money into the General Fund.
The utility funds are in worse shape, with more serious problems.
“I don’t see cutting our way out of the water and sewer funds,” Auditor Tom Jettinghoff said. “The hole is just too big.”
The city was mandated to install new equipment to handle increased loads coming from plants in the I&K complex. The companies produced food, including mashed potatoes and potato salad, and the city was forced to rebuild the plants to handle the increased waster and wastewater plants. Those employers, which were also the city’s largest water and wastewater customers, have all left town, leaving the city with improved facilities that aren’t needed now, debt in the millions and residents holding the bag.
One man asked a question about doing as Detroit did, and filing for bankruptcy. Law Director Clayton Osting that while he has researched the idea to be able to respond to questions about it, the numbers don’t yet necessitate that action.