CANTON, Ohio — The state's latest financial report shows Canton is still financially stressed but improving.
For the first time in years, the city's general fund expenses did not exceed revenue in 2016, according to the Ohio auditor's Financial Health Indicators report released last week. The city reported a $5.1 million general fund deficit at the start of 2016 and subsequently slashed expenses.
"I think that the reductions that we made in expenditures, which were the substantial cuts that we discussed so frequently last year, probably contributed to our progress in all of these categories because our revenue stayed relatively constant," said Mayor Thomas Bernabei.
Canton has halted automatic wage increases for elected officials, management and non-bargaining personnel since at least 2016. Reductions in staff, overtime and other expenses made in 2016 were maintained through 2017, Bernabei said.
State report
It's the second year the state used 17 financial indicators to measure the stability of cities and counties. They're meant to warn local governments before a financial crisis.
The indicators are declared "critical," "cautionary" or "positive." Six critical outlooks or a combination of eight critical and/or cautionary outlooks classifies a government as stressed.
In 2015, Canton had nine critical and two cautionary indicators. In 2016, the city had six critical and four cautionary indicators. Here's what changed in 2016:
- Unassigned money in the general fund increased, changing a critical outlook to a positive one.
- General fund revenue exceeded expenses — for the first time since 2012 — and moved a critical status to cautionary.
- Government-wide revenue was greater than expenses, making a critical indicator positive.
- The percentage of general fund revenue from sources vulnerable to state and federal budget cuts, such as grants, increased. The reliance on non-local sources of revenue changed a positive outlook to cautionary — the only indicator that worsened.
Overall, the city's financial challenges continue, Bernabei said.
"It is also, as this document demonstrates, and as our own internal documents demonstrate, it is significantly improved from where we were in 2016," he said.
Looking ahead
With a projected $950,000 general fund shortfall in 2018, Canton City Council will vote Monday whether to freeze wages for another year.
The pay freeze has not applied to previously negotiated raises in three-year union contracts. The Canton Police Patrolman's Association contract included a 2 percent base salary raise each year between 2015 and the end of this year.
City Council approved new contracts in 2017 with police, fire, clerical and other personnel.
"All collective bargaining agreements that have been negotiated during this period of time have had zero wage increases in them," Bernabei said.
The city, accounting for wage increases that might be negotiated in the future and a potential tax revenue decrease as Nationwide Insurance ramps down, projects a $1.5 million shortfall in 2019.
"Any information that we know right now that's going to happen in the next few years, we use that in our projections," said Finance Director Mark Crouse.
City Council will vote Monday whether to issue a $2 million revenue bond anticipation note, as it has the last several years, to help cover general fund expenses. It acts as a six-month loan to the city, which then pays the money back.
Council also will vote on a temporary budget in the coming weeks to get through the start of the year. A final 2018 budget must be approved by March 30.
"There won't be too many differences in that budget, I don't anticipate, based on the requests that the departments have made right now for 2018," Crouse said.
