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With a tax increase shot down at the polls, Athens leaders face limited options for reining in expenses
By: David Forster
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ATHENS, Ohio (WOUB) — The mayor of Athens says he doesn’t have many good options when it comes to trimming the city’s budget now that a proposed income tax increase was voted down this week.
The city’s biggest expense by far is personnel. So he’ll be looking at possibly not replacing some city employees when they retire or leave for other reasons, Mayor Steve Patterson said.
Because personnel costs consume about 75 percent of the general fund budget, it doesn’t leave the city with much room for cost-cutting elsewhere.
Patterson said he may look at cutting funding for major street work by half in the next budget cycle. Potholes will still get filled and other basic maintenance will be covered, he said. But the city has spent a lot of money in the past few years completely rebuilding streets instead of just patching them up, he said.
That may have to be scaled back.
City leaders put the income tax increase before voters because expenses are rising faster than revenue. Much of this is driven by rising personnel costs, including significant increases in the cost of health insurance.
The city is still operating in the black, but the tax increase was intended to help stave off the day when expenses pushed past revenue. Voters rejected the proposal 835 to 625.
Now the city is going to have to do more preventative cost-cutting.
The city’s general fund — income tax revenue combined with revenue from a variety of other sources — covers the operating costs of it’s various departments. Just over half of the operating budget goes to two departments: police and fire.
Patterson said as he and other administrators look at potentially reducing personnel through attrition and hiring freezes, they’ll try to minimize the impact on city services.
“People are going to have to recognize that the city as a function is going to have to do more with less, with fewer people to get things done,” he said.
City officials also will be taking a closer look at funds that get appropriated in the budget for certain things, but aren’t getting spent, or at least not as much as anticipated, Patterson said. This may present opportunities to do some trimming here and there and shift funds around to where they’re more needed or park them in an emergency fund.
But outside of personnel and street funds, Patterson said there isn’t much else to cut that would amount to significant savings. It would mostly be nibbling around the edges of the budget.
“Things that are tweakable and reducible pale in comparison to wages and benefits,” he said.
The ever-rising cost of health insurance is one of the big cost drivers in the personnel budget. But there’s not much the city can do about this, Patterson said.
There are cheaper health plans, but they often come with significant tradeoffs, especially when it comes to out-of-network care, he said. The city also could make employees pay a larger share of the premiums.
But the city has to weigh this against remaining competitive as an employer when it comes to hiring and retaining experienced employees, Patterson said.