Village Council— Budget to ‘burn through’ reserves
- Published: November 19, 2020
There’s money to spend, but not for long.
That was the message from Village of Yellow Springs officials, who plan to dip into reserves to cover $1 million in deficit spending next year.
Village Manager Josué Salmerón told Council members during recent budget planning meetings that while prior administrations have kept larger reserves, the plan is to spend the money to make infrastructure repairs, among other expenses.
“We’ve built up those reserves by not spending; now we’re spending them down,” Salmerón said.
Next year, general fund spending — which includes costs for streets, parks and police and most administrative costs — is budgeted at $4.29 million, while revenue is projected at $3.24 million.
To cover the $1 million deficit, the Village would deplete the general fund reserves down to about $700,000. In recent years, the reserve has been closer to $2 million.
Those reserves won’t last long, Salmerón told Council, a situation he said Council members have known about for at least a year.
“Based upon the burn rate of the reserves, we’re going to have a ‘come to Jesus’ moment in about 12 months,” Salmerón said.
Starting in 2022, he added, the Village will have to make “pretty drastic changes.”
“We’re anticipating burning through all of our reserves in 2021,” Salmerón said.
The message came during six hours of budget sessions held over the last two weeks. The meetings were discussion only; Council will consider legislation for next year’s budget in early December.
Council members raised numerous questions and concerns about the draft budget presented by Village staff.
Council Member Lisa Kreeger suggested the Village not “drive full speed at that wall” by quickly depleting its reserves, but find a “happy medium” with spending.
“We should keep front and center what we can do now to both get done what needs to be done while mitigating the severity of the anticipated crisis in a year,” Kreeger said.
According to the draft budget, general fund spending is set to increase from $3.09 million in 2018 to $4.29 in 2021, a 39% increase over four years.
General fund revenues, though, are going in the opposite direction; they are projected to decline from $3.88 in 2018 to $3.24 in 2021, a drop of 16%.
Council Member Laura Curliss questioned the projected spending throughout the meetings, pointing out significant spending increases in several areas, including parks and recreation and capital projects.
Curliss said that Salmerón, who started in June 2019, seems to be “comfortable with a significantly lower reserve than past managers.” Curliss was Village manager from 2011–13.
Specifically of the electric fund, “you’re managing it differently than other managers have,” she said. That fund will be spent down to $1.2 million in 2021, the legal minimum that must be kept in the fund.
Council President Brian Housh seemed to support the overall spending plan, saying the goal was to “right-size” the Village’s budget.
“We need to invest current taxpayer dollars on projects that are happening that will benefit them,” Housh said. “I feel strongly that we shouldn’t just be sitting on money and not doing anything with it.”
Faced with the future depletion of reserves, Salmerón said he would continue to seek outside grants to fund local projects. Another approach is to use “economic development tools” such as tax abatements to incentivize job growth and promote annexation, which would expand the tax base, he said.
Regarding annexation, Salmerón said the community needs to “do something different” after adopting a “no-growth mentality” in the 1970s, referring to the creation of the greenbelt at that time.
“The status quo isn’t going to help our community thrive and succeed,” he said.
Curliss challenged Salmerón on the issue of annexation, saying that residential development typically costs more to service than it brings in. She also argued that the Village couldn’t “have it both ways” by both giving tax deferrents or abatements, then counting on the property tax benefits.
“You’ve made the argument that annexation will bring tax revenue,” Curliss said. “We can’t then turn around and give it away.”
Police spending rising
Council Vice President Mariane MacQueen also pushed back on spending increases in some areas. Specifically, she homed in on the projected rise in spending on local policing, which accounts for nearly half of the general fund. MacQueen noted that the police department budget grew by a half million dollars in the last four years.
“That’s a lot,” she said.
Police spending in 2021 is set to reach $1.75 million, up from $1.27 in 2018, an increase of 38%, according to Village figures. Most of the growth, about $340,000, is in personnel costs.
MacQueen said that before finalizing the budget she would like more information about, and rationale for, the department’s current staffing level.
“What I would like is really an understanding of why we need exactly the number of officers and dispatchers — why that is necessary,” MacQueen said.
Council Member Kevin Stokes added he would like to learn more about officer activities, perhaps by reviewing shift reports.
The YSPD currently has 21 employees, out of a total of 49 municipal staff, according to Salmerón. That includes 12 full-time officers and dispatchers, eight part-time employees and one full-time community outreach specialist.
Village staff briefly mentioned the upcoming hiring of an additional officer to replace an existing officer, due to a retirement, but no details were added.
In total, police personnel costs have increased from $1.13 million in 2018 to a budgeted $1.47 million next year, a jump of 30% in four years.
In response to questions, YS Police Chief Brian Carlson explained current staffing levels are based on the goal to have two officers and one dispatcher on duty at any given time. All shifts are covered by two officers except for one, between 3 and 7 a.m., he added.
Having two officers on duty is justified, Carlson said, due to the influx of visitors.
“We are a village of 3,800 people and on a good weekend, that number can triple,” he said.
Another specific area highlighted as an additional expense was uniforms. The Village plans in 2021 to purchase new police uniforms, which are set to cost $34,000, with $10,000 needed annually thereafter to maintain them. Carlson has previously spoken about “less militaristic-looking” uniforms.
“I’ve heard from Council and citizens that you would like a different type of uniform,” Salmerón said of that expense.
The high cost of dispatch services was also addressed during the meeting. Salmerón said the cost of running dispatch is expected to reach more than a quarter million dollars next year.
Council Member Kreeger said she would like to “thread in” Council’s vision for policing into the department’s budget, specifically the desire for “more social services.” And Council President Housh said that he wants to see “better thinking about bike and foot patrols vis-a-vis vehicles.”
5% salary increase?
During the budget meetings, there was some Council pushback on a Village plan to increase the pay for salaried employees by 5%. MacQueen, for instance, asked pointedly, “What is the rationale for increasing salaries when we don’t have the income to pay them?”
Salmerón responded that the proposed raise was a “healthy allocation” and is needed to retain talent in a “competitive environment.”
“It’s also the right thing to do,” Salmerón said. “Yellow Springs is not cheap, and other communities are also getting expensive.”
The Village manager also argued that staff have worked hard and would “earn the increase,” in part through securing grant funding, which “previous administrations have not done.”
“I think just this year, the team has shown its value,” Salmerón said.
Curliss, though, said she thought the figure was high compared to more typical salary adjustments, which are in the range of 1–2% to keep up with rising inflation.
“Five percent is on the high side, even for an annual raise,” she said.
Curliss also said she worried that increasing at such a high rate will compound salary costs — and related expenses such as retirement contributions and payroll taxes — into the future.
“I’m not saying people don’t deserve it, I’m saying, are we doing something that’s untenable in the long run?” Curliss said.
MacQueen and Kreeger also chimed in on the issue, suggesting that the Village project the impact of a 5% increase over the next five to ten years before deciding on the allocation.
A subsequent budget document prepared for Council showed the impact of a 3% annual increase on staff salaries over the next decade. According to those figures, Village personnel costs would rise from $2.52 million next year to $3.39 million in 2031. Council member salaries are also subject to a cost of living adjustment, and are set to rise to $8,218 next year, according to the document.
The highest paid Village staff next year, according to the projection, are the Village manager ($115,211), public xorks director ($107,880) and police chief ($87,699).
Enterprise revenues exceed costs
Although the general fund is running at a deficit, the enterprise funds are set to generate more revenue next year than they cost to run. According to Salmerón, the enterprises — electric, water, sewer and solid waste — are supposed to be “their own self-sustaining businesses.”
In 2021, the Village is projected to bring in about a half million more dollars from utility ratepayers than it costs to run the enterprises. That’s in part because electric fund expenses are falling from $5.6 million in 2018 to a projected $4.2 million next year, due to the drop in energy prices.
But that doesn’t mean residents can expect lower utility bills. The administration’s goal is to keep utility rates flat by cutting costs, according to Salmerón. Council members wondered, though, if utility rates could be looked at.
“The idea that we could possibly reduce cost for community members is something I’ve wondered about,” Kreeger said.
The largest cost in the water fund is annual debt payments of around $300,000 for the new water plant, which opened in 2018. Curliss said even with that cost, it still might be cheaper for Yellow Springs to purchase water from Springfield, which MacQueen said is a “conversation that shouldn’t be happening.”
“The community wanted a water plant,” she said. “There is no more important resource to our community than water.”
There was also some debate around plans to apply for a grant to upgrade the Village’s electric system, which would require a local match of $750,000, money to come from the electric system reserves.
Curliss pushed back on the electric upgrades, which are aimed at increasing reliability of the system and thus reducing the length of power outages.
“It’s a huge amount of money to have a little more reliability,” Curliss said. “These are modern problems,” she added. “We have pretty great electric service even those few hours a year that the power is out.”
But MacQueen and Housh argued in favor of the spending.
“We’ve been sitting on this money since I’ve been on Council,” Housh said of the electric fund reserves.
Looking at the budget overall, spending is up, explained Salmerón, because “we’re doing a lot more work, we’re getting a lot more done” compared with previous administrations.
But Kreeger urged caution on spending increases due to the coronavirus pandemic, which was not foreseen in the 2020 budget. She said the budget discussion is “shadowed by the uncertainty of our times” and that, looking ahead, she worries about the ongoing pandemic’s impact next year.
“We are going into 2021 with some anticipation that the pandemic will continue to rage, perhaps into next summer,” she said. “A lot of my concerns are related to that and insecurity about that.”
The budget meetings, held on Oct. 26, Oct. 29 and Nov. 3, are available to view at the Village’s Community Access Channel YouTube site. Because of a recording error, only the second hour of the budget meeting on enterprise funds is available.
In Council business from its Nov. 2 regular meeting—
• The Village is preparing for its next step in the potential annexation of 34 acres of land on the southern edge of town for a residential housing development of up to 138 units. In response to a question from the News, Salmerón said he had assembled a “work group” set to meet for the first time the week of Nov. 9. That group will help draft a development agreement with Oberer, an action that could take place as soon as next month, he confirmed. However, Salmerón declined to answer a News question about who was in the group and how they were selected. The Greene County Board of Commissioners has not yet received an annexation petition from the developer, according to Greene County Commissioners Clerk Lisa Mock this week.
• In response to a question from the News about the public accessibility of virtual Council meetings, Council members argued that virtual meetings have effectively expanded access to meetings because citizens can now phone in a comment or watch remotely via YouTube. In-person, socially distanced meetings in the Bryan Center gym, which were previously discussed as an option, were determined to not be as safe as virtual meetings, especially as the incidence of COVID-19 surges in the county, they added.
“We’re going into the winter at a time when the numbers are spiking,” Kreeger said. “I think it would be foolish for us to take chances.”
• Council unanimously passed the first reading of several ordinances amending subdivision regulations at the recommendation of Planning Commission. The amendments increase the number of days for an application to be filed prior to a Planning Commission meeting; clarify how to measure a structure when considering setback requirements; make changes to pocket neighborhood development regulations; clarify that setbacks of 7.5 feet are needed from power lines, even if a structure is less than 144 square feet; require a demolition permit when structures are removed; and give the zoning administrator more flexibility to allow uses with a similar impact.
• Laurie Freeman and Nya Brevik were sworn in to the Arts & Culture Commission; Carmen Lee was sworn in to the Human Relations Commission.
Council’s next regular meeting is Monday, Nov. 16, via Zoom.