Whitehall News

'Financial suicide'

Rec center postponed indefinitely

By ThisWeek Community News  • 

The plan for a community center in Whitehall has been put on the back burner.

The city's plan for a recreation center on a former U.S. Army Reserve Center site, which was inherited from the federal government, has been postponed indefinitely, Whitehall Mayor Kim Maggard announced during a Aug. 27 Whitehall City Council committees meeting.

Maggard told council members it would be "financial suicide" to go forward with the sale of bonds because the city currently can't afford the debt service. The estimated cost to build the recreation center is $10 million.

"It's crushing," she said. "I want to (build the recreation center), but I just can't do it in good conscious."

She acknowledged that construction of a recreation center was among the goals of her first-term as mayor.

Maggard, who served eight years as the city auditor, was elected mayor in 2011.


Revenues down despite

income-tax rate increase

In 2010, Whitehall voters approved an income-tax rate increase from 2 to 2.5 percent, effective Jan. 1, 2011.

Maggard, referring to a report from city auditor Dan Miller, illustrated the effects of sequestration at the Defense Supply Center Columbus, the federal base with 9,000 military and civilian employees who are responsible for about 65 percent of Whitehall's annual income-tax revenue.

Whitehall was spared even greater income-tax losses this year when the federal government reduced the number of furlough days at the DSCC from 22 to six.

It was wasn't enough, though, Maggard said, as the city's income-tax revenue dropped in 2012 and is projected to drop again in 2013.

In addition to the loss of income-tax revenue, the city is seeing an increase in the number of businesses seeking income-tax refunds rather than allowing owed funds to accrue as credit.


Timing incompatible

with projected funding

"It's just not feasible to go forward (with the recreation center)," Maggard said, adding that the city has an annual debt service of nearly $250,000 for the fire station through 2017.

Yet sequestration, according to Miller's report, accounts for a loss of only $250,000 out of a total projected revenue loss of $1.7 million for 2013.

Miller estimated that actual losses in 2012, combined with projected losses in 2013, will equal a two-year net loss of $2.54 million.

Maggard attributed the additional losses to cuts in the Local Government Fund, the elimination of the state inheritance tax and more DSCC employees working off site.

"Local Government Funding is horrendous," Maggard said.

Such funds were $1.4 million in 2011, $972,379 in 2012 and are projected at $744,010 for 2013, Miller reported.

Estate and inheritance-tax revenue dropped from $249,277 in 2011 to $114,767 in 2012. It is projected at $93,411 for 2013.

Withholding taxes for DSCC employees dropped from $11.9 million in 2011 to $11.5 million in 2012. It is projected to be $11.05 million for 2013.

Income-tax refunds increased from $281,365 in 2011 to $396,244 in 2012. It is projected at $550,000 for 2013.

Maggard said sequestration at the DSCC is not the only issue that is affecting the city adversely.

Miller's report indicated the DSCC is increasing "telework," jobs that employees perform off base at their residences or elsewhere, in which case Whitehall refunds DSCC for the time such employees work off site.

"As sequestration drew to a close, we expected to see a return to normal, but it wasn't happening," Maggard said.

Maggard said she had asked Miller to review the city's finances, and together they concluded the city was not prepared to make the necessary financial obligation for the recreation center.


Assessing priorities

Maggard also circulated a copy of the 2010 city ordinance that placed the income-tax increase on the ballot.

"We never said (the income-tax increase) would be used explicitly for the recreation center," Maggard said.

The 0.5-percentage-points increase was projected to raise $4.2 million a year beginning in 2011, but instead of raising $12.6 million in the three-year period ending this year, it will raise an estimated $10 million.

Since the start of 2011, the city has used $7.4 million of that $10 million to meet such obligations as maintaining, repairing or upgrading the city's water and sewer systems, street repairs and fleet maintenance.

Those improvements, Maggard said, constitute the capital improvements, operations and maintenance projects city officials had told voters the tax increase would support.

Reaction at the council meeting appeared limited, with conversation focusing on whether the city should demolish some or all of the armory building while waiting until the city could afford to finance a recreation center.

"We're paying utilities for a building we are not using. ... I have no problem leveling it," Councilman Leo Knoblauch said, adding that the site also is a target for criminal activity.

Maggard said any possible demolition would not occur until the city learns the results of a study on the city's park system.

"We are probably remiss not to consider knocking down at least part of the armory," Maggard said.

The former armory is at 721 Country Club Drive.

Whitehall parks and recreation director Steve Carr, who had advance knowledge of the mayor's decision, said Aug. 29 that he was disappointed.

"We're still trying to digest the details of the decision," Carr said, referring to the seven-member Parks and Recreation Commission. "Since the day I was hired (in 2010), my focus has been on the talk of a recreation center, but now we will refocus. If it's not in the cards, then we'll begin looking through a new lens at what is possible with our budget limitations."

Carr said Maggard had advised him of the decision during a staff meeting six days prior to the Aug. 27 meeting.

Maggard reiterated to him her desire for the parks and recreation department to find alternatives for programming, he said.

Councilman Wes Kantor, who also is chairman of council's parks and recreation committee, said Aug. 29 he believed Maggard's decision was necessary, but he hopes it opens the door to better alternatives.

Kantor said he favors construction of an aquatics center in lieu of a recreation center.

The estimated cost of an aquatics center is about half that of the recreation center, he said, adding that it would attract more users from within and outside Whitehall and could be financially self-sufficient.