Worthington's 2018 budget is complete and, as has been the case for several years, one of the most challenging aspects of the process was in compensating for declining state funding.
Worthington City Council approved the operating budget Dec. 4.
The budget details expected expenditures of more than $26.4 million and just under $30 million in estimated revenue.
City Council President Bonnie Michael said although she was "proud" of the job the city's finance team did in "making sure the budget is balanced and we have a good carryover balance in case anything comes up unexpected," the city could be working with more funding if not for years of decreasing state-issued funds.
According to finance director Scott Bartter, those funding levels have been decreasing consistently for a decade. He said the elimination of the funding has caused "an increased reliance on the municipal income tax."
In past years, Worthington received state funds generated from the tangible personal-property tax, the state's local-government fund and the estate tax. The tangible personal-property tax was written in the 1800s and added a tax to equipment, inventory and furniture used for business purposes; the local-government fund was established in 1934 to distribute a portion of the state's income tax to municipalities; and the estate tax was a graduated tax on the assets of a deceased person's estate, according to the Ohio Department of Taxation website.
In 2007, funding from those three sources for Worthington totaled $2.1 million.
In the 10 budget cycles since 2007, funding has dropped each year but one, when a large estate-tax allocation in 2012 pushed the figure higher than usual.
In addition, state leaders have eliminated both the tangible personal-property tax (a tax on everything other than real estate that is used in a business or rental property) and the estate tax (a tax on the transfer of the property and estate of a deceased person). Thus, in 2017, Worthington will not receive a single dollar from either source.
In the 2007 budget, Worthington received just over $1 million from the local-government fund.
For 2017, Worthington is expected to receive $325,000 from that source.
Bartter estimated that since 2008, the city has lost $9 million in revenue from the three streams, when compared to previous levels.
That is why the city is relying more and more on its income-tax collections, he said.
In the 2018 budget, about 74 percent of the city's funding comes from Worthington's income tax of 2.5 percent, which was set in 2010.
"The shift is that the general fund is now 75 percent reliant on the municipal income tax, which is subject to the ebbs and flows of the economy," Bartter said. "As a result of an increased reliance on the income tax, the city has adopted strategic policies to help buoy the city's finances in the event that an economic downturn, loss of a major employer or actions by the state legislature causes a decrease in income-tax revenues."
Michael said Worthington has done "a very good job" trying to balance the city's "top-notch" services with economic development, despite the lack of state funds.
"I think it's real sad that we're constantly losing state funding," she said. "But the only thing we can do at that point is try to tighten the belt and be very careful with where all the money goes."
Although, she said, a few million dollars may not make or break the budget each year, the impact is on the "fun" projects city leaders would like to include in the annual capital-improvements program.
But with missing funds, the CIP often is limited to necessary infrastructure projects.
"Where (the budget) gets to be compacted the most is being able to do the extra CIP things," Michael said. "Those are things that get pushed a few years down the road, and we can't do all the projects that we'd like to do."
The budget estimates Worthington will begin 2018 with nearly $12 million available in the city's general fund. After expenditures of $28.4 million, the general fund is expected to hold steady at $12.2 million heading into 2019.
For more information, including the full budget and capital-improvements plan, visit worthington.org.