Gahanna finance director Jennifer Teal presented a five-year forecast to council Oct. 22, showing a reduction of about $3 million annually as a result of cutbacks in various revenue sources.
Teal said forces outside of the city's control could change reality "quite a bit and will continue" in the future, resulting in a flat forecast.
Included in the reduction is the loss of $823,000 annually from the Local Government Fund (LGF). She said 2013 would be the first full year to feel the impact of the phased reduction that was enacted as part of the state's 2010 biennial budget.
After the phased reduction is completed in 2013, the city will receive about half of its historical LGF from before 2010, amounting to a reduction of $825,000 annually, Teal said.
She said the city also would see a reduction in interest and investment income amounting to about $1.2 million annually.
Gahanna also will lose an average of $350,000 annually as the distribution of the estate tax comes to an end Jan. 1, 2013.
Teal said she anticipates a $170,000 annual reduction in property tax revenues. She reported that real estate revenue for the third quarter of 2012 was $1,648,120. That's 105 percent of what was expected for the entire year ($1,573,214). Even still, collections are down about 5 percent over the same period last year, Teal said.
She attributes the drop to a 6-percent reduction in the assessed values in the city, based on Franklin County's recent property revaluation process.
She said the city receives less than 3 percent of the real estate taxes paid by Gahanna property owners. For the owner of a $185,000 home, Teal said, the tax bill would be $3,900, with the city of Gahanna getting $118. The remainder is distributed among other publicly funded entities, such as the Gahanna-Jefferson schools, Mifflin and Jefferson townships, the Columbus Metropolitan Library system and the Columbus Zoo and Aquarium.
Teal said the city's income tax is the most important when looking to the future because it's the city's largest source of revenue. In the third quarter of 2012, it made up 60 percent of general-fund revenue.
Although predicting the total income-tax revenue for the year is a challenge, Teal said, the third-quarter data are promising. She said withholdings are up 9 percent from the same period in 2011, thus supporting the idea that Gahanna's tax base has recovered from the 2008 financial crisis and is stabilizing.
Gahanna collects income taxes from business withholdings, individual/resident returns and net profit returns. The bulk of the collections -- 72 percent through the third quarter -- are from business withholdings. Teal said that underscores the city's dependence on the financial success of local businesses.
Through the third quarter of 2012, employer withholdings increased 9 percent over the same time period in 2011.
Teal said the rise in withholding indicates more people are working in Gahanna and paying income taxes, people are earning more money and thus paying a larger amount in tax collections, or it's a combination of the two.
General-fund expenditures for the third quarter of 2012 were $20,101,102. Compared to total general-fund appropriations of $31,790,048 for the year, the city has spent 63 percent of appropriated funds.
Thus far in 2012, the city has spent more than $2 million on capital outlay in the general fund and transferred another $2.8 million to the capital improvement fund for projects included in the community investment program.
General-fund expenses exceeded revenue by $1.2 million through the third quarter of 2012. The resulting unencumbered balance of the general fund is $13,514,951 as of Sept. 30.
The city has a mandatory requirement to set aside 25 percent of the year's planned general-fund revenue as an emergency reserve. For 2012, this mandatory reserve is $5,611,302. At the end of the third quarter, the general-fund unencumbered balance exceeded that mandatory reserve by $7,903,649.
As 2012 comes to a close, Teal said, the administration is finalizing its five-year forecast for the general fund, as well as its 2013 appropriations recommendations.
"State reductions to multiple revenue sources, along with economic volatility in tax collections and investment earnings, will pose significant challenges in the city in 2013 and beyond," Teal said. "Declining revenues and anticipated increases in the cost to maintain the city's aging assets will make it critical for the city to manage its available resources conservatively and maintain accountability and transparency to the public."
Council member Dave Samuel asked Teal if she and her colleagues consider changes in the political scene when looking at the future.
"No matter who is at the White House, our tax collections will be what our tax collections will be," she said. "When looking at peers and the state in the next five years, everyone is pretty much in the same boat as us."