Fostoria approves budget

FOSTORIA — Fostoria council members approved an update to the city’s fiscal recovery plan and a permanent budget Tuesday that projects the city will be in the black by the end of 2019.

The city was placed under fiscal emergency in May 2016 because of a substantial deficit. For now, the city is monitored by the Financial Planning and Supervision Commission. That panel was formed by the state auditor to bring Fostoria out of fiscal crisis — meaning the city has funds on hand to operate for three months.

Council and the commission, comprised of representatives of state and local government and Fostoria residents, are mandated by the state to approve a five-year fiscal recovery plan annually. The city budget, which mirrors the plan, also was approved Tuesday.

The proposal does not appear to meet the Ohio Revised Code requirement of forecasting a three-month carryover in all funds at the end of the five-year period.

This is in part because of decreased income tax revenue projections compared to the 2017 plan.

Belinda Miller, a representative from State Auditor Dave Yost’s office, said the goal of the plan was to create a 2018 budget and it shows the city is working to eliminate deficit balances.

She said the plan also is used as a tool for city departments.

In December, council approved a temporary budget to allow the entities more time to work on the plan. Now the plan must be approved by the planning and supervision committee to go into effect. Councilman Doug Pahl said that meeting is tentatively scheduled for Feb. 21.

Miller said income tax projections in the plan are based on 2017 collections plus a 2 percent annual increase.

Miller said the city began 2018 with a $1 million General Fund deficit, but she believes the deficit could be erased by the end of 2019.

City Finance Director Steve Garner said about $250,000 of the increase could be attributed to the city removing half of tax reciprocity, a tax credit that allows people who live in one municipality but work in another to be credited for taxes they pay where they work. Reciprocity is to be eliminated this year.

Garner said it is difficult to compare 2016 and 2017 figures due to a bookkeeping anomaly tied to Fostoria’s hiring of Regional Income Tax Agency. RITA was hired in May 2016 to help collect unpaid taxes.

He said in 2016, one month of income tax collections were reported as just $8,000, because of a transition to RITA reporting the tax revenue. He said this means the increased figures could be deceiving.

According to the plan, the projected General Fund deficit at the end of 2018 is $320,708 but there is an expected surplus of $141,212 by the end of 2019. The plan forecasts the surplus to increase to about $362,765 by the end of 2020 and $368,085 by the end of 2021 before falling to $178,468 at the end of 2022.

Miller said if city officials reviewed the proposed plan in 2022, they may see a difference in the projections versus reality.

“We’re taking a pretty broad shot in the dark,” she said of the projections, adding that the focus should be on this year. “It’s all you can do with this forecast.”

Projections were given a boost by the November approval of a 6-mill property tax levy to help fund safety services.

There was no further discussion of the plan during Tuesday’s five-minute council meeting.