Today, Mayor Jackson delivered his 2015 budget estimates to City of Cleveland managers and members of the media. Mayor Jackson uses this opportunity to update City of Cleveland employees and the general public on the fiscal outlook of the city’s budget for the upcoming year. In addition, Mayor Jackson reinforces the roles public servants play in delivering high quality service to to every resident, visitor, and business in the City of Cleveland. Below are highlights of the presentation.
Where we are
Mayor Jackson began by emphasizing that despite economic growth in our area, the city’s revenue remains flat. The city receives no direct benefit i.e. sales tax, business tax (Commercial Activity Tax) from the development of restaurants, hotels and businesses in Greater Cleveland. The municipal budget is supported primarily by income taxes (60%) and property taxes (18% county levy).
The city continues to have challenges to its revenue from outside issues such as House Bill 5 . This, and others like it, substantially reduce the amount of income tax that the city collects. Mayor Jackson explained that in spite of these revenue losses, there is no anticipation of any new taxes that would positively impact revenue collection. The City of Cleveland will continue to focus on controlling its costs. The Mayor explained that successfully controlling costs will preserve the current work force and the efficient delivery of services.
For at least 10 years, revenue has not kept pace with the increase in expenses. The global recession and state budget cuts led to significant revenue loss for the city.
–Permanent loss of $18 million property tax in 2007-2014 (global recession – foreclosure crisis).
–Permanent loss of $30 million in local government fund (LGF), commercial activities tax, tangible personal property tax and estate tax combined since 2010.
–Additional losses of $13.2 million between 2014 – 2015 (Red light camera revenue, fines & forfeitures etc.)
- 2011 to 2012 Income Tax Increased $15.3M
- From 2012 to 2013 the decline is local government fund ($5M)
- From 2013 to 2014 the decline is an estate tax ($2.3M)
- From 2014 to 2015 the decline is ($3.3M) workers compensation, ($6.9M) camera fees. Other major decline in revenue details are shown on slide #8 ($14.8M)
Expenditures are primarily driven by wages and benefits. The increase in cost this year is primarily due to the increase in wages and the increase in police personnel (COPS grant).
Other expenditures include:
- Civil service testing
- Health care
- Increased cost in the price of road salt
- DOJ compliance
- Anticipated prep costs for the RNC.
Carry Over Balance
This fiscal year the city is beginning with a carry over balance of $49,626,721. In 2013, through increased revenue collections and strict fiscal controls, the city was able to stabilize carry over balance at $49.3 million. Last year, 2014, carry over balance ended up at $49.6 million. This carry over balance will help offset increased expenses in 2015.
2015 Fiscal Estimates
The projected beginning balance for 2015 is $49.6 million. The city’s revenue estimate is at $494.5 million, this will bring total city resources to $544.1 million.
As stated, the city is incurring increased costs this year bringing expenses to $541.7 million. That will leave a projected ending balance of $2.4 million – necessary to cover potential cost increases or additional revenue loss or carry over for next year.
Role of Public Servants
Mayor Jackson ended his presentation by reiterating the role City of Cleveland employees play as public servants.
“The work we do as public servants is key to our financial success and our bottom line: service delivery.” – Mayor Frank G. Jackson
As public servants, the City of Cleveland will continue to maintain services offered the public and do so with the aim of exemplary customer service in mind.
View the full presentation here: Mayor’s Budget Estimate January 2015