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Fiscal commission pegs Niles deficit at $2.4M
By Jordan Cohen
NILES
The project manager of the commission tasked with a recovery plan to get the city out of fiscal emergency has projected this year’s general-fund deficit at $2.4 million.
“The general fund fell from $8.4 million in 2010 down to [nearly] $2 million in 2013, a decline of 77 percent,” said Tim Lintner of the state auditor’s office. “[It] has been used to bail out funds many times, but this time there’s nothing left in the fund to bail out.” Lintner said 2014 figures are not yet available.
“It’s a survival issue,” warned Sharon Hanrahan, who chairs the seven-member Niles Financial Planning and Supervision Commission overseeing development of the recovery plan. The commission was created after state Auditor Dave Yost declared Niles in fiscal emergency last October.
The commission is required to submit a recovery plan by May 12, but it will be considerably longer before Niles emerges from fiscal emergency. Hanrahan said the average time is four years.
Mayor Ralph Infante, who is a commission member, attributed one reason for the city’s failing finances to low interest rates paid in a difficult economy.
“We used to get $1.5 million interest [annually], and now it’s down to just $22,000,” the mayor said.
Infante said he already has begun working on a recovery plan and is looking closely at the city’s health care expenses, which have to be negotiated with employee unions.
“Our health care plan [costs] over $4 million, and I’d like to get it down to $3.3 million,” the mayor said. “If we want to maintain police and firemen at the current levels, we have to get those health costs down.”
That may not be enough to help reduce the red ink. Infante said that the budget for the police and fire departments is $7 million, but the city’s income tax is only generating $6 million.
“There could be pain in what we have to do,” said John Davis, a commission member who is a retired business executive.
“Living with it isn’t the same as liking it,” said Hanrahan, who warned that voters could reject tax increases that might be placed on the ballot.
“If that happens, we might be back to square one,” she said.
Hanrahan explained the city can reduce spending, increase its revenue or combine both. Council would have final approval.
About the only piece of good news the commission had for council is that reconciliation of the treasurer and auditor books is nearly completed, meaning the recovery plan can go forward.
One other potential bright spot is that the city may have a financial carryover of $1.3 million, but that would still leave a $1.1 million deficit that has to be eradicated over the long term.
“Without drastic measures, I don’t see how the city will prevent the general fund from going into default this year,” said Robert Marino, council president who is also serving on the commission. “We have serious financial decisions facing us in relatively short order.”
The commission’s next meeting is scheduled for March 18.