Levy, increase on income tax discussed

By Robert Connelly

rconnelly@vindy.com

CANFIELD

City officials this week discussed a new loan to restructure debt and build an extension to the police department.

But they continued to express concern over the lack of revenue to keep the city operating within its $9.6 million budget.

Councilman John Morvay floated the idea of a capital-improvement levy. He said during the managers’ meeting in the Canfield city council chambers Wednesday morning that would go toward the purchase of technology upgrades, building improvements and new vehicles. The city already has approved the purchase of a new police-dog vehicle for the police department and a new plow truck.

“I think we need it, and we are at that point where we need to ask the taxpayers,” Morvay said.

Mayor Bernie Kosar Sr., however, didn’t think another levy after the current school levy, in its first year, would be good to put in front of taxpayers. “I would oppose putting a levy on at this time,” Kosar said.

Councilman Chuck Tieche pointed to the city spending over budget last year.

According to the city’s fiscal year 2013 budget, Canfield brought in $10,044,853 in total revenue, but spent $11,813,642. The budget for fiscal 2014 projects the city’s revenue at $8,607,345 and again, having to pay more, with costs projected at $9,601,556. The city was able to go over budget in recent years by using a cash balance from the previous year. The city’s finance director, Christine Stack-Clayton, said officials are conservative when taking funds from that source. In the 2014 budget, $5,780,691 is available in what Stack-Clayton called the “carry-forward balance.”

Council President Steve Rogers then talked about the idea of raising the income- tax rate, which Tieche said the city has never raised from 1 percent. “Council can approve a tax increase of 1 percent without a [taxpayer] vote,” said Tieche.

Rogers proposed looking at a rate increase of 0.5 percent, to a total of 1.5 percent. The tax increase would help fill a revenue gap, as council has been paying the difference in a water increase over the past eight years instead of passing it on to customers. According to Canfield’s 2013 budget, the water department brought in $2,646,206, but paid out $3,299,044 and absorbed $552,838 in costs. This year is projected to bring in $2,059,850, but have costs totaling $2,298,786, with an absorption of $38,936 in costs for taxpayers.

City officials decided to put something before council that would pass the rate increase to customers effective July 1.

Tieche gave credit to the previous councils, because a surplus absorbed the rate increases. “We should at the very least keep up with the raise in rates,” city Manager Joe Warino said.

Warino added that the city is deciding between two contractors to begin replacing water meters in the city, more than 50 percent of them. The new meters could be read on a monthly basis, instead of the current quarterly billing system, thus indicating any leak sooner. Residents will see their bill rise, about $20 to $30 on average quarterly, because “the older they get, the slower they run,” said Warino, who added that means lost revenue for the city.

Warino and Rogers both said council will vote at next week’s meeting on the $1.24 million loan to restructure the city’s debt and for an addition to the police department. About $500,000 of that $1.24 million loan will go toward a police-department addition, to the east of the current building. The city has been looking into an expansion at the police department since at least 2000.

One of the reasons council looked to approve the add-on to the police department was because the police department routinely has come under its budget on a yearly basis, about $30,000 to $40,000 per year under budget. Last year, the department was under budget by $133,100, mostly through eliminating three part-time positions. The police station addition would cost the city about $2,948 a month extra in its debt payments, but if the department continues to come under budget, the add-on would pay for itself.

The loan also will lower the interest rate on the remaining balance at Red Gate Farm from 3.65 percent to 3.07 percent. Red Gate, a 290-acre property at state Route 62 and Leffingwell Road, was bought for $2.3 million in 2003 and has yet to be developed by the city besides leasing it for farming and gas wells.

Warino said that change will save the city close to $300,000 in interest payments. The city, from 2003 to 2007, elected to pay off only the interest, not the principal. In 2007, the city decided to start paying off Red Gate at a rate of about $150,000 a year, Warino said.