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There are many dynamics to projections and estimates; however, none are to the scale of $2.3 million. The City needs to identify $2.3million in increased revenue or additional reductions in expenses. Currently, the police and fire budgets consist of 90% expenditures for personnel, and 10% to operations. In other words, a $2.3 million cut involves reducing personnel which results in drastic cuts to service levels. The following is a view of projected cuts and reductions to accommodate the loss of $2.3 million:
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In 2008, the City of Huber Heights responded to citizen’s desires and allowed for a .25% earned income tax rate to rescind by vote of the citizens. At the time, there was more than $12 million in cash reserves in the city’s operating reserve fund. Since then, the city has been forced to deplete the reserve at an average rate of $2 million dollars per year in order to maintain current levels of safety and city services. Voters rejected an attempt to raise new revenue in 2012. Maintaining current service levels, the reserve fund will be depleted in 2015, and the city will need to raise additional revenue through an earned income tax increase or forced to drastically reduce city services.
The City of Huber Heights is dedicated to being open, honest and transparent. In 2012, the city went to the voters with a tax increase that would have generated enough revenue to maintain current service levels preventing the depletion of the cash reserve; however, the voters turned it down. Now that we are at the crossroads, we are informing residents of the choice that they will need to make: raise new revenue through an earned income tax or experience reduced safety and city services.
The music center is funded with a projected payment plan consisting of only Tax Increment Financing (TIF) revenues, and no general fund revenues. The music center is currently being built using short-term notes (less than 1% interest) to finance the construction which will save the city money on interest charges as opposed to obtaining bonds at the current time. Once the construction is finished, and the total costs are verified, long-term financing will be sought. The payments on the music center will then be made from the TIF funds. TIF funds can only be used on infrastructure and public facilities, not on safety or city services, personnel, or operational expenses (i.e. they can be used to build a building, but not used to pay for staffing or operating the building). Again, no general fund money is being used to build the music center. A separate fund will be created to operate the music center. The operational expenses are expected to be covered through a variety of projections to include: sponsorship's, naming rights, operating revenue, and the terms of the operations agreement. In our estimates, there is no projected loss when including all the revenues available generated by the music center. Again, this includes naming rights deal, sponsorship's, etc. The operating revenue is difficult to project at this time; however, it is proportioned based on the number of events held. In other words, the sales of tickets, concessions, etc. for the events held are projected to financially support the cost of operating the facility.
An independent feasibility validation study conducted by the nationally recognized Conventions Sports & Leisure details all projected revenue and economic development impacts, view the Feasibility Validation Study March 14, 2013 (PDF).
The city put out a request for a bid from qualified and experienced building companies that have constructed similar types of buildings in the past. Once all qualified bids were received, the city awarded the contract to the lowest and best bidder.
The buildings may look similar; however, there are considerable design and structural differences. In addition, there was more infrastructure required to build our music center. The PNC Pavilion was built in 2008 as an addition to an existing site, using already owned land and infrastructure. Our project had to include costs such as the purchase of the land, site work, the parking lot, concession buildings, bathrooms, a courtyard area, landscaping, and additional exterior building costs. Considering the differences in scope as well as the difference of construction costs compared to 6 years ago, the cost of our music center cannot be directly compared to PNC Pavilion.
The music center was designed and built to become an economic catalyst for Huber Heights. The goal and mission of the music center is to provide a top-class amenity, add to the cultural arts, and bring people into the area to spark additional development and economic benefit to our community. This concept has already been proven to work, as a major economic boost has been attracted in even before the music center is completed! GoodSports hotel and fieldhouse will be breaking ground in the Spring, and will bring the world of sports tourism to our community. Their project is expected to bring well over $100K each year in additional revenue just at their facility. That does not include the economic benefit to our existing and future restaurants, hotels, and other service and entertainment businesses. There is a growing flow of interest from other significant development that will positively impact the economic growth and development of Huber Heights. An independent feasibility validation study conducted by the nationally recognized Conventions Sports & Leisure details all projected revenue and economic development impacts, view the Feasibility Validation Study March 14, 2013 (PDF).
There will be a demand for some additional safety services; however, many of the needs will be met through the operations of the music center itself. For example, internal security will be hired by the operator and will be paid as part of the operations of the event. In addition, any extra costs for specific events will be billed to that event. Much like any other activity within the community such as festivals, parades, fireworks, etc., we have good plans in place to manage the increased event-specific demands.
The City of Huber Heights is committed to a long-term communications program with its residents where they can voice their opinions and concerns. Similar to a gallop poll, it is logistically impossible to contact everyone in the city to participate. However, the phone poll does allow for the polling of both landlines and cell phones, with representation from all ages and wards throughout the city. The information gathered is simply to serve as a baseline for future discussions. The results have been posted to the city’s website, and all residents are encouraged to participate in any upcoming community outreach meetings.
Our commitment is to keep up-to-date, factual information available for our residents. We are always open for requests, and we are continuously building the information made available on the city website. The city’s financial information, including annual reports and budget expenditures, can be viewed on our website by visiting the Finance Department's page.
The city has been working diligently as the funds for construction have been accruing to secure a potential location for the new firehouse. With the reduction in revenue since 2008, the project plan has been evaluated against fiscal responsibility. Although funds have been accrued to build the structure, without additional revenue the city would not have the funds available to staff the firehouse if it was built. Without having the revenue to ensure staffing levels beyond 2015, and to remain fiscally responsible, the city is holding off on the construction process. However, if additional revenue is created, the existing plans will be immediately finalized, and the project will be able to begin.
The city is dedicated to serving its residents with the level of services they desire. The current level of safety and city services is unsustainable at current revenue levels. Because of this, the city is allowing its residents to decide if they would prefer to maintain current safety and city services by voting to pass an earned income tax increase, or reduce/cut safety and city services by voting to deny an earned income tax increase.
An earned income tax is exactly that; tax on income that is earned through employment or business operations. Retired senior citizens and those unemployed are not taxed. The following items are not taxed in an earned income tax:
We have heard from residents that some people want a permanent tax due to voter fatigue, while others would prefer a five or ten year earned income tax. No decision has been made, as we are continuing to listen to the opinions of our residents.
Since 2008, the City has had a reduction of more than $13.7 million in revenue due to governmental changes. That includes.25% reduction in earnings tax and elimination of the local government funding from the State. In addition, the effects of the economy has provided an additional loss of $8million of revenue. Since 2008. The City has managed the $22 million reduction in revenue by operational cuts over the past 6 years; averaged to over $3.6 million per year. Today, the City is operating at the same budget request dollars as 2008 and is in fact maintaining more with less. There has only been an overall 1.6% increase in the budget since 2008 while managing the $22 million reduction in revenue, increased operational costs (not expenditures), and maintaining acceptable service levels. After making significant operational cuts and reductions of over 20 full time personnel through attrition, the City has been subsidizing the cost of safety and city services from the reserve fund at an average of $2 million per year. Even considering the significant cuts made in the past 6 years, and while maintaining the current service levels, the cost of those service levels is higher than the revenue brought in. Here are the differences from 2009 through 2014 (budgeted) of revenue brought in versus the cost of current operations:
At the end of 2015, it is projected the City will not be able to fund a 2016 budget at the current operational service levels; therefore an increase in revenue is needed, or a reduction in personnel and services will take place.
Recently City Council passed a motion to authorize the City Manager and City Attorney to take the necessary steps to prepare a ballot measure for a proposed city earned income tax increase for November 4, 2014. This does not mean ballot language has been developed and approved. Votes to adopt specific ballot language for the issue will come at a later time. The recent motion authorized the continued development of the ballot language as we engage the community to identify priorities and terms.
You can view all upcoming community engagement sessions on the City’s website, Community meetings and city ward meetings will be announced on our website, Facebook page and local media.
There is no question that employees are the largest cost of our operation. In fact, for public safety, 90% of the budget is for people, and 10% is for things. To that fact, we have strived for several years to stay a productive and competitive work environment to keep adequate care of our most valuable asset. We are entering contract negotiations, and I can assure you that we will approach it with a goal of cost containment. A benefits package is much more comprehensive than just salary and health care, and where there are reductions in one, it may cause increases in the other. Nonetheless, I can assure you that we have many years’ experience in managing employee costs to maximize benefit to the community. At this point, it is not permitted to discuss elements of negotiations, but you can be certain that all elements of employee benefits will be discussed with two primary goals: 1) contain costs 2) provide quality working conditions to maintain quality employees. When we discuss those things, it is a comprehensive discussion with many variables and comparables, not just based on a couple of elements. We will always work hard for the benefit of the community.
The presentation last year included a large foam-board representing the image of a check. Of course, that was not real check, and in fact the date on it was November 2014. The check represented a value of land that the City owns which is under an option contract for purchase at the value of $1.8 million. The presentation was to show that when the option to purchase land was invoked, then payment will be made. The time period of the option ends in November 2014. The purchase of the land will occur within the time from of the contract.
We commonly get questions about why items are passed by council as an “emergency,” along with the suggestion that things are being rushed through without public input or comment. We have heard these concerns, and are working diligently to give as much time possible between public meetings for citizen input and discussion about agenda items. However, there are still appropriate times when either waiving the readings, or passage of an item as an emergency will be necessary. View the Emergency Clause page for details and a full understanding.
Shall the Ordinance providing for a 0.25% levy on income for a period of 10 years beginning January 1, 2015 and continuing until December 31, 2024 for the purpose of Police and Fire Public Safety and Support be passed?