2013 operating budget
Revenues expected to outpace expenses slightly
Worthington City Council took its first look at the proposed 2013 city operating budget this week, and the news is positive.
City revenues and spending will be up slightly next year, with enough money to continue to provide city services at current levels. Revenues are expected to be $25.3 million, with expenses at $24.4 million.
Even better news is that the bottom line -- the general-fund balance, or so-called rainy-day fund -- increased to more than 15 percent of the total budget in 2012 and is expected to be more than 20 percent of the budget through 2017. That is important because in 2009, when the recession hit the city hard, council decided it needed to beef up its rainy-day fund. That year's rainy-day saw city income-tax receipts drop 13 percent in two quarters and gave the city enough of a scare to warrant a new commitment to maintaining a healthy balance.
Council decided the city must maintain a balance of at least 15 percent and approved a resolution stating its intention.
The lowest the balance dipped was 7.5 percent at the end of 2010. The balance increased to 12.8 percent of the budget in 2011 and will be 17.7 percent at the end of this year. By the end of 2013, the balance is expected to be 23.7 percent of the budget. That is $5.7-million.
Contributing to the additional balance is the increase in the income-tax rate from 2.0 percent to 2.5 percent, an increase approved by voters 2010.
Council also beefed up the operating budget's bottom line by essentially borrowing from the capital improvements program (CIP) budget. Instead of earmarking 20 percent of income-tax revenues for the CIP, in 2009, council decided to send only 13.6 percent to the CIP each year through 2013.
The additional funds for the general fund in 2013 should total nearly $3 million.
In 2014, the general fund/CIP allocation of 80/20 (percent) will return, according to the resolution approved by council in 2009.
City Manager Matt Greeson has not recommended that council change that decision, but he said the city is not out of the woods financially, even though the five-year forecast presented this week seems positive through 2017. In that year, revenues are projected to be $26 million, with expenses at $26.5 million. The general-fund balance in 2017 is expected to be $5.6 million, or 21.4 percent of the budget.
The challenge is that the city now relies more on income-tax revenues than it has in the past. When voters approved the income-tax increase in 2010, it accounted for 62 percent of the total budget. Today that figure is 71 percent.
The change is due to the increase in the income-tax rate and a decrease in state funding. The loss in local government funding, the estate tax and the tangible-personal-property-tax reimbursements is expected to amount to $1 million in 2013.
Because income-tax revenues are volatile, the city must consider maintaining an even larger fund balance, Greeson said. Fifteen percent is low, he said.