Springfield was listed as one of 13 cities facing an elevated state of fiscal stress by the state auditor’s office but a recently passed income tax increase has improved the city’s financial outlook, local leaders said.
Last year Springfield had a critically deteriorating general fund balance and expenses exceeding revenues, according to a report released last week by Ohio Auditor Dave Yost.
Using 2016 data in 17 key areas — such as fund balances, revenue trends and debt — the state auditor issued a report to cities and counties on how they’re doing to help them avoid a financial crisis.
In 2015, the city of Springfield had seven cautionary labels and two critical labels, the report says. In 2016, that number fell to five cautionary labels and two critical labels, Finance Director Mark Beckdahl said.
“It showed the community where we were at at the end of 2016 and the difficulties we were facing,” he said. “I think that’s the take away really and why we needed the four-tenths of a percent (of income tax). Things will be dramatically different at the end of 2017. Financially, the city is looking up.”
Springfield residents passed a 5½-year local income tax increase in May, raising it to 2.4 percent from 2 percent. The income tax hike generates an additional $6.7 million annually for the city’s general fund — a portion of which was expected to restore the city’s depleted rainy day reserves.
PRIOR COVERAGE: Ohio Auditor: Springfield under fiscal stress
One of the critical indicators was triggered by having a general fund balance that had declined in three straight years or 20 percent — Springfield had hit both of those metrics, Beckdahl said.
“We were in big trouble,” he said. “Thank goodness the citizens came forward with the tax increase. I think we’ve turned the corner and are headed in the right direction.”
Springfield is expected to collect about $43.1 million in general fund revenue next year, including $33.9 million in income taxes. The city is projected to spend about $42.6 million, leaving a projected surplus of about $520,000 next year. The city is also projected to have a surplus of about $1.3 million at the end of this year — a year after projecting a deficit of nearly $850,000.
The city commission’s goal is to have about 10 percent set aside but a recent performance audit said the city’s rainy day fund should sit at about 16 to 17 percent.
The report includes some positives for Springfield, including a low amount of debt and compliance with budgetary records.
Clark County received cautionary labels in three areas, while the remaining 14 areas were labeled as positive. In 2015, the county received two cautionary labels.
New Carlisle received one cautionary label in its preliminary report.
In addition, the report named nine cities and one county across Ohio showing signs of fiscal stress in 2016, the most recent year full information is available. None of those were in the Miami Valley, but nearly two-thirds of Ohio’s governments had more “critical” or “cautionary” warnings than the year before. The same is true of 45 percent of the 247 cities surveyed.
“Our cities and counties are generally well-managed,” Yost said. “Unfortunately, those leaders sometimes are challenged by financial factors beyond their control: A major employer downsizing or relocating, or reductions in federal or state funding. They’re working hard to be good financial stewards but it’s clear there is elevated financial stress in many of our local governments.”
3 QUICK SPRINGFIELD READS
The Springfield News-Sun provides complete coverage of government spending, including extensive coverage of school levies and Springfield’s recent income tax increase.
By the numbers
2 percent: Previous income tax rate
2.4 percent: Current income tax rate
$6.7 million: Revenue recently-approved .4-percent income tax increase generates annually.