Council readying balanced budget

January 15, 2013

Frank Lewis

PDT Staff Writer

Portsmouth Mayor David Malone has presented Portsmouth City Council with a balanced budget. However, Council chose Monday night to give only a second reading to the ordinance to make appropriation for the current expenses and other expenditures, as required by Section 49 of the City Charter, thus, not acting on the balanced budget.

“Council does have a balanced budget, and I don’t really see a need for a second reading,” Malone said. “We would like to get this passed so that we can actually have the General Fund not to be burdened with some undue expenses as relates to the budget, where some of the General Fund individuals would be moved over into Enterprise Funds, and we don’t want to put that additional burden on the General Fund. Council has received a balanced budget, and I just don’t see why it’s not approved and passed tonight.”

Second Ward Councilman Rich Saddler said Council members had just received some replacement sheets earlier in the evening, and that they had not had time to look those over, and he thought the ordinance should receive a second reading to give them time to read the replacement sheets. Portsmouth City Auditor Trent Williams also disagreed with Malone, saying he had not had time to look over the complete budget.

Malone told Council he had only recently learned that the city would receive $227,000 from the Inheritance Tax from Scioto County officials.

“Mr. Mayor are the charge-offs that are in this budget in agreement with what the state or current study has…” Third Ward Councilman Nick Basham asked.

“It’s not quite in line, but we have reduced the charge-offs to almost $200,000, so it’s almost half of what it was in 2012,” Malone said. “As far as the Schonardt (and Associates) report, this doesn’t fall in line with those - no, but we’re hoping again with the new cost allocation plan, that it will be more favorable to the city as to what we charge off.”

According to Chief Deputy Auditor Robert Hinkle of the Auditor of State’s office, “When declared in fiscal caution, the city had three funds with deficit fund balances on a Generally Accepted Accounting Principles (GAAP) basis. When reviewing the city’s 2011 Comprehensive Annual Financial Report, the city has nine funds with deficit fund balances on a GAAP basis. Regarding the three fiscal caution criteria deficits, all three deficits increased from Dec. 31, 2010 to Dec. 31, 2011. This includes the General Fund deficit which increased from $530,043 to $1,658,384. This increase includes the audit adjustment of $427,458 which resulted from the cost allocation plan discrepancy.”

The cost allocation plan dealt with charge-offs by the city in which money was utilized from revenue funds to fund other parts of the operation of the city. The $427,458 was transferred back into the funds, creating a larger than projected deficit in the General Fund.

The city is in the process of receiving another cost allocation report later in the year.

The discussion was elevated when First Ward City Councilman Kevin Johnson wanted to amend the ordinance to add $36,500 for expenses incurred by the city manager search committee to enable the city to continue to outline the qualifications and then to hire someone to go through the process of finding candidates. The city changes over to the Council/City Manager form of government in 2014.

“On the subject of amending to add an expense, I presented Council with a balanced budget. If this issue was to be a part of this budget, I think it should have been requested before we actually put the budget together, but to have this put in now, after struggling to even come up with a balanced budget, we just found out this afternoon that this Inheritance Tax was available to us,” Malone said. “Now, to include something like this, which has nothing to do basically with 2013 operations of the city…”

Malone said the money for the city manager search committee would put the budget in the hole $36,500.

Council had asked the Municipal Courts for $60,000 to balance the budget, and the courts had authorized the appropriation with the stipulation that it would help balance the budget. However, since the city found out about the Inheritance Tax, Malone had gone back to the courts and told them the $60,000 would not be necessary. Council asked Malone if he could go back and ask for the $36,500 from the courts to keep the budget balanced and yet deal with the expenses of the city manager search committee.

In the balanced budget proposed by Malone, the available funds total $12,227,000, and the budget was $12,220,000.

“We were able to meet with the unions and do some shifting of personnel, transitioning them from the General Fund to Enterprise Funds without causing a negative impact on the Enterprise Fund,” Malone said Tuesday morning in an interview with the Daily Times. “There were some other line items that we were able to reduce, and, of course, the court’s $60,000, and also I had Council’s insurance line item to zero. That’s what one of the councilmen asked me to do, and we did it.”

Malone said Council’s insurance was re-instated once the city received the Inheritance Tax funds.

In the end, Johnson withdrew his request to amend the ordinance, with the plan to work over the next two weeks to find the money for the city manager search committee, and to give the ordinance a second reading.

Frank Lewis may be reached at 740-353-3101, ext. 252, or at