LIMA — At the end of the first six months of 2018, the City of Lima hasn’t strayed far from estimated budgeted expenditures and revenues. But during Finance Director Steve Cleaves’ presentation in front of the finance committee Monday night, he highlighted a few trends that could point to problems down the road.
Since 2013, the City of Lima has steadily increased its expenditures over revenue to come back from the hit it took from the Great Recession. Cleaves said the extra funds have been invested in capital and boosting the city’s manpower up to pre-2008 levels. But today, the city is ready to “tap on the brakes” and ensure its general fund cash balance remains close to a healthy $7 million.
The difficulty, however, lies in financing some of the city’s plans surrounding digital technologies — primarily the recent purchase of body cameras and institutionalization of a new high-level tech position.
“The employee count is going to be more than a handful by the beginning of next year, and it’s going to be high priced, or at least more than a secretary,” Councilor Sam McLean said.
Cleaves said the city will be able to absorb any extra costs incurred by balancing how employee attrition affects the bottom line and cutting back heavily on capital investments now that city equipment and properties are in good shape.
Another potential hurdle the city will have to face is increasing health care costs going back to 2017. Last year, the city ran a $1.78 million deficit in its employee health care account. As of June 30, the 2018 deficit stands at $850,000, and if the trend continues, the city could face another heavy loss.
“Healthcare expenditures have really accelerated in the last couple years,” Cleaves said. “This is not making me happy, so we’re going to have some sort of negotiations.”
As a result of increasing health care expenditures, the city’s healthcare cash balance has been roughly halved since its 2015 high of $2.8 million.
Future issues aside, Cleaves said the city is in good financial shape and is on target for its 2018 budget.
“You have a direction you’re going, but you got guardrails. If you hit a guardrail on one side or the other, then you got to change your plans,” Cleaves said.
Reach Josh Ellerbrock at 567-242-0398.