Athens looks to change interest allocation to help ease financial troubles

By: Jack Greene
Posted on: Monday, April 29, 2024

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ATHENS, Ohio (WOUB) — The Athens city auditor warns that continued spending from the general fund could worsen the city’s already precarious financial situation.

Auditor Kathy Hecht said the city’s cash reserves in the fund have fallen below 6.5%.

Hecht said city policy requires 7.5% to 15% of the general to be held as reserves.

“It’s like not spending up every bit of your paycheck every time you get paid,” she said. “You try to keep some money aside, and that’s what we need to do in case we have unforeseen expenses.”

She said the already-low reserves took an additional hit after the City Council passed a $100,000 appropriation for workers’ compensation on April 15. This was 10 days after Hecht sent an email asking city officials to hold all nonoperating costs.

Hecht wants the reserves to be back at 9% before any more spending is done, but she said that so far, there is “nothing showing that will be going up soon.”

The general fund is used to help the city make payments throughout the year.

However, multiple unanticipated costs came up toward the end of 2023. This means there was less carryover to this year, and now money is tight as the city makes its payments.

Hecht said the City Council does have the power to pass spending ordinances, but it is not financially wise with the reserves so low.

Some sources of revenue that can replenish the general fund include parking meters and taxes, but revenue can fluctuate month to month. Under a proposed ordinance, an additional source of income would be added to the fund.

Under the Ohio Revised Code, all interest the city receives must go to its general fund. But since 1991, Athens has not followed this.

“We weren’t really doing it wrong,” said City Treasurer Josh Thomas. “You can credit all the money into the general fund. Then, the auditor would have the discretion to move those payments into other funds. … That seems to be the decision the city made at that time.”

Thomas said keeping interest revenue in the general fund, as proposed under the ordinance, could help.

“Last year, we made well over a million dollars in interest,” he said. “I project we will easily make that again this year.” 

Hecht said the possible boost from the ordinance would not be seen until the city’s financial report at the end of May.

The ordinance will be up for first reading by the City Council at its next meeting on May 6. Hecht said she plans on asking for an emergency vote on the ordinance at its second reading so that a third reading is not required.