CLAYTON — With the defeat on Nov. 7 of a proposed income tax increase from an existing 1.5 percent to 2.5 percent while restoring a 100 percent tax credit, Clayton officials are trying to find a way to convince its residents why the increase is needed.

Revenue generated by taxes is not keeping up with the costs of running the city, so the city has to find ways to cut its expenses.

Clayton will be cutting community events like Labor Day fireworks and will not fill some vacancies when people retire. The city also plans to eliminate the fall leaf pickup program in 2024.

The city’s waste hauler, Republic Services, will haul away leaves if residents rake and bag them up. Residents also have the option of mulching their leaves with their power mowers.

Sweep Clayton Clean and document shredding events have been eliminated from the budget. Residents can still dispose of items using bulk item pickup through Republic Services.

City council held a workshop session Dec. 7 where Director Finance Kevin Schweitzer presented a detailed breakdown of the city’s available funds and operating expenses.

Total expenses have increased in the general fund. Police expenditures have decreased some due to retirements. In 2021 police expenses totaled $2.6 million when a significant amount of money was spent to equip officers with body cameras.

In regard to the overall budget, the city is seeing expenses increase to exceed its available revenue. As a result, the city has had to make fund transfers to cover its expenses.

“In 2021 we did $2.7 million in transfers. This year we did about $3.3 million and we are looking at about $3.4 million next year,” Schweitzer said. “It’s just the nature of the expenses involving the cost of personnel as well as the cost of the supplies and materials going up and our revenue is not keeping up with expenses.”

Expenditures are eating away at the city’s fund balance. In 2021 there was a $600,000 difference between revenue and expenditures. That increased to $1.7 million in 2022. In 2023 there was a $1.8 million difference and it is projected to be $1.7 million next year.

“You can see that it is adding up and eating away at our fund balance over the years,” Schweitzer noted.

Schweitzer presented a detailed breakdown of expenses versus available revenue for each department.

The fire department saw a slight increase in funds expended for personnel, about $200,000 due to the hiring of more full-time personnel. The city added more lieutenants after the formation of the fire collaborative with the cities of Englewood and Union.

“We need to figure out a way to communicate the whole property tax scenario because people think that because property taxes are going up that the city should be getting more and more money, and that’s just not the case,” said Mayor Mike Stevens. “Although people pay more taxes we don’t get more money from that and as expenses continue to go up we are getting ourselves in a bind.”

Vice Mayor Tim Gorman suggested the city have County Auditor Karl Keith in to speak to residents about taxes.

“He explains it very well in layman’s terms,” Gorman said. “If I can understand it, a lot of people can understand it.”

Schweitzer noted that one thing that helps the city is that staff budgets conservatively in its general fund revenue and does not spend everything it gets on expenses. Despite that, expenses continue to exceed available funds and is eating away at the city’s available revenue.

By 2025 the city will be facing a deficit. When that happens, the city will be having talks with the state auditor’s office. If the city is in a financial emergency the state will come in and make cuts.

Schweitzer pointed out that Clayton is a young city, only being in existence for 25 years while neighboring Englewood has a more solid financial footing due to a blend of commercial, retail, and light industrial businesses in its various commerce parks.

“We are a bedroom community. We are houses basically,” Schweitzer said. “If we could get more of that blend with workers contributing to the city that would definitely help us out, but that takes time. With this just falling on our residents, it’s a bigger burden for them.”

Mayor Stevens argued that the city needs more rooftops to attract businesses even though the city has a lot of land for businesses to build on.

“Businesses do research. They just don’t buy land and start building, and if the research is not there for them they’re not going to end up here, they are going to go right next door like they do or go to Miami County,” Stevens said.

“Next door isn’t any bigger than we are, maybe by a hundred people,” Gorman noted referring to Englewood.

Schweitzer said Englewood’s commerce parks are a big difference. Clayton has one but Caterpillar took all of the available space, which Schweitzer said is not a bad thing.

“To have something available for businesses to come in to would be nice. We don’t have that right now,” Schweitzer added.

Reach Ron Nunnari by email: [email protected].