The city of Gahanna and Gahanna-Jefferson school leaders are crunching numbers to see how Gov. John Kasich's proposed budget would affect their financial bottom lines.

The city of Gahanna and Gahanna-Jefferson school leaders are crunching numbers to see how Gov. John Kasich's proposed budget would affect their financial bottom lines.

Under Kasich's proposed budget, which must be passed by June 30, Gahanna's Local Government Fund (LGF) would be cut by 25 percent in the first year and another 25 percent in the second year.

Gahanna public-information manager Brian Hoyt said the city would realize the impact of the LGF reduction mid-year because the city's budget is based on a calendar year from January to December, whereas the state's fiscal budget is from July to June.

Gahanna initially projected receiving about $1.3-million from the LGF, but Kasich's proposal would reduce this year's revenues by $123,000 to about $1.2 million.

The 2011 LGF had accounted for 6 percent of Gahanna's projected revenue, but that would be reduced to 5.5 percent if the budget is approved.

"Like most municipalities, the city of Gahanna has been anticipating some reduction in local government funding," said Angel Mumma, city finance director. "However, it comes on the heels of a time where this city is dealing with reductions in other main sources of revenue, such as income-tax receipts and interest earnings.

"We have been implementing service level and personnel reductions over the past few years to help offset the declining revenue. This additional reduction in revenue will obviously impact the services that we can provide to our residents."

Mumma said she and other city leaders would continue to look at all aspects of city spending to make sure each dollar that's spent has the largest positive impact to residents.

Under Kasich's proposal, Gahanna would expect to see a $352,960 reduction in LGF revenues from the state in 2012, with the LGF then making up about 4 percent, or $888,974, of the city's anticipated revenue.

Hoyt said revenue from the LGF for 2012 is an estimate based on 2011 budget figures but would be accurate only if nothing is different regarding revenue and expenses in the future.

Because the city hasn't created the budget with council for next year, it's likely that figure would change, he said.

Gahanna-Jefferson school treasurer Julio Valladares said the state's proposed budget would result in more than a $1-million reduction in state foundation money for next year alone.

"While the governor's proposed biennial budget appears to have increased general state funding for most school districts, several other funding areas are changed and would result in significant decreases to the funding Gahanna-Jefferson Public Schools receives," he said.

In addition to the foundation money, Valladares said, the loss of American Recovery and Reinvestment Act funding is a concern.

"Many school districts received state foundation dollars that were based upon this money, but those federal dollars are no longer available to the state, and the governor's draft budget does not replace these funds," he said.

In addition, Gahanna-Jefferson expects to see a significant decline in the revenue from the state's reimbursement of the tangible personal property tax on business.

Though businesses stopped paying this tax in 2010, Valladares said, the state has continued to reimburse this money to school districts with a plan to gradually phase it out entirely by 2018.

"The governor's budget has significantly adjusted the phase-out plan, and Gahanna-Jefferson may lose at least $2-million in revenue from this revenue source in FY12," he said.

Considering the uncertainty of the state budget and the implications of the changes proposed by Kasich, Valladares said, the district's 5.2-mill operating levy on the May 3 ballot is even more important. If voters don't approve Issue 6, the district will have to make another $7-million in cuts before the beginning of the 2012-13 school year to balance its budget.

"We already have made $12-million in cuts over the last three years," Valladares said. "Those cuts allowed us to reduce the amount of the millage request, but they are permanent. Issue 6 will not restore those reductions, but with careful and continued financial management, it will provide the funding necessary to prevent further drastic cuts to our staff and programs."