At this time last year, Canal Winchester's finance director said she saw the final income tax revenue numbers from 2007 at $4,119,825.

At this time last year, Canal Winchester's finance director said she saw the final income tax revenue numbers from 2007 at $4,119,825.

This year, finance director Nanisa Osborn said she expects a 2008 income tax revenue of about $4,191,000. Last week, she said the number should be "right on budget within in a few cents."

Osborn, like most other municipal finance directors, invests that money throughout the year. In 2007, Osborn said village investment earnings were about 12 percent of the total income tax, or $450,000. That's enough money to pay for a "pretty good chunk of a big road project," she said.

Investment gains for 2008 didn't paint such a pretty picture. Osborn said last week she expects a return that would be substantially lower, by more than $100,000.

"It's a very difficult situation right now for both sides -- investors and borrowers -- because the picture is not good," she said. "It's pathetic right now when the Federal Reserve is loaning money at 0 percent interest; it's really not good right now."

Investments are considered safe because of a statewide mandate that all municipalities adopt an investment policy to safeguard capital. Village officials established such a policy for Canal Winchester in 1997.

According to information from the village finance department, the investment policy includes the Ohio Subdivision's Fund, also called STAR Ohio; bills, notes, bonds and other securities issued by the U.S. Treasury; obligations guaranteed by the U.S. government; certificates of deposit (CDs) from commercial banks covered by the Federal Deposit Insurance Corporation (FDIC), and bonds of the state of Ohio.

"One of the most conservative ways to maintain a portfolio is to have a good mix," Osborn said. "Every finance director out there who's worth their salt is doing this. It's not unique."

The village currently holds bonds, but no share of stock and no mortgage-backed or asset-backed securities, with Freddie Mac and Fannie Mae, Osborn said. Freddie Mac and Fannie Mae were placed into conservatorship by the U.S. government in September, adding an additional level of security to these investments.

Osborn said that at any given point 75-percent of village funds are invested in longer-term investments, lasting one to five years, 20-percent in short-term. About 5-percent sits in a checking account, operating as a working fund.

The working fund can grow up to 10-percent in the summer for capital improvement projects and in December for debt payment, she said.

This is Osborn's fifth year with the village, but she has worked in public sector finance for 24 years, and another 10 years in the private sector, she said.

Osborn said the volatility of the 2008 economy spawned some "wacky" interest rates from the U.S. government, but she had seen similar rates during 1987.

"It was ugly then. It's ugly now," she said. "We've had a lot of things that I've never seen."

Osborn gave an example of 0- to 1-percent interest rates on investment opportunities.

It was much different in the 1970s when interest rates were more than 10-percent on average.

"I've seen it go both directions; whether that's good or bad I don't know," she said. "The economy's not good, so we have to watch what we're doing."

Osborn said the government can issue debt with a call position, meaning the issuing entity can call for all investments in a bond to be refunded and issue new debt without penalty. Osborn said she normally sees investment opportunities with a three- or six-month call position.

Lately, however, she said she's seen bonds with continual call, which allows the issuing government entity to sell back debt at any time.

"And that's what's going on right now - for lack of a better term - weird things," she said. "It's because the market is so volatile right now."

But, she said, not nearly as volatile as trading stocks on the New York Stock Exchange.

"If you took me to the market, you'd lose me in half a second," she said. "I don't live on that edge."