Reynoldsburg City Council unanimously approved the city's proposed 2012 budget at its March 26 meeting.

Reynoldsburg City Council unanimously approved the city's proposed 2012 budget at its March 26 meeting.

The budget will carry the city through the year, but as city officials have said, 2013 and beyond will be the challenge.

"The solution to the city's long-term problem is not in this document (the 2012 budget)," City Auditor Richard Harris said. "We're still facing the same financial problems we talked about last year, and they're not going away."

He said $3 million left in the city's general fund after last year is about $800,000 more than expected. Instead of running a deficit last year, the city ran a surplus, especially over the last couple of months of 2011.

Estimated revenues this year are $12.7 million, with $14 million in expenditures projected. Harriis said the $3 million in the general fund will stay there this year and be available to make up for an anticipated $1.3 million shortfall, if needed.

"However, 2013 is going to be a problem and a solution is going to have to be found," Harris said. "We're going to lose another $150,000 a year from the state, and the estate tax, which is about $300,000. As expenditures continue to go up, we're going to have that loss of revenue."

Harris said council will either have to find additional revenue for 2013 or make major cuts.

"This year is a different story," Councilman Mel Clemens said. "We have to do something to upgrade what we have coming in, and there's only two ways to do it."

Clemens said he is not in favor of it, but one option would be to place another request for an income tax increase on the ballot in November.

A similar proposal was rejected by voters last year.

A second option - and one he favors - would be to lower the tax credit, which is currently at 100 percent, for residents who live in the city but work in and pay income taxes to another municipality.

"I think it's up to council now to step in and take action," Clemens said. "ÉThat's what we were elected for. We can't let Reynoldsburg fall apart."

Another reason to find new revenue is so capital improvements needed throughout the city can be brought back to a sustainable level, Harris said.

"The capital needs of the city are not being met," he said. "We have streets that need work. The average piece of equipment the city owns is 10 years old. We're looking at major streets like Taylor Road and Brice Road that need major work and we just don't have the money for it.

"In order for us to get this on a sustainable path, it would take about $2 million in street improvements and when you're only putting $200,000 a year in the capital improvements fund from income tax money - you can do the math on that one," he said.

Councilman Scott Barrett asked the finance committee to add further discussions about Reynoldsburg's financial issues to its agenda in the coming weeks.

"Doing my homework over the last month tells me we really need to be addressing some of the front-end revenue issues," Barrett said. "Being a new person on council, I have a lot of respect for everyone in the city and how well they've done with the budget, doing a lot with a little, but it's not going to really address the needs of this community in the long term."

Councilman Chris Long said adding a discussion item to the finance committee's agenda would not be a bad idea because in June, the city begins working on its 2013 budget.