Clayton discusses revenue issues at workshop


CLAYTON — During a May 16 workshop session the City of Clayton discussed revenue issues and the need for a levy to generate funding for city operations.

Director of Finance Kevin Schweitzer addressed council about the city’s financial situation. He prefaced his discussion by stating that “not much has changed” since the issue was last discussed.

Voters defeated a proposed levy in March that would have restored a 100 percent tax credit while seeking an additional one percent increase to the city’s existing 1.5 percent income tax. The issue was defeated by 133 votes with 52.11 percent in favor of the levy and 47.89 percent against.

Recapping the collection of property taxes from 2017 up through 2023, Schweitzer said all of the city’s levies are capped out with the state using a reduction factor on how much the city can collect from those levies.

He noted that even with new construction and new homes being built, there would be no significant increase in revenue.

Transfers from the city’s general fund have steadily increased during the same period, especially to fund police, fire, and EMS operations. Losses for Meadowbrook were also included.

“If you take Meadowbrook as a department, compared to the others it is doing better than the other departments,” Schweitzer said. “It does have its own revenue source, so it does help.”

Removing operating expenses for police and fire services revealed that the city would still need more transfers in order to operate.

“That means you will be cutting staff positions even if we cut all of our operating expenses, we would still have a deficit that would require transferring money,” Schweitzer stated. “Personnel costs is the biggest chunk of our expenses, so even trimming anything from our operating expenses, which we’ve done already, we are still going to come up short.”

The city is down to only one battalion chief for the fire department and is down two police officers. Candidates to fill those positions have noticed the levy failures and financial issues the city is facing.

“As a result, we are having trouble recruiting new police and fire personnel as well as retaining those that we have,” Schweitzer noted.

Schweitzer gave projections for next year and 2026. He said if the city can’t pass a levy it would be operating at a deficit. When those issues arrive the city would have to enter discussions with the state, which might place Clayton under a fiscal watch or fiscal emergency when the state would step-in and take over fiscal operations.

“We are still working within the budget that we approved and trying to keep expenses down by moving stuff around so we don’t have to ask for more,” Schweitzer said. “We are doing what we can, but since 2004 when we instituted an income tax the expenses have grown due to inflation and cost of living expenses at a higher rate than tax collections have.”

A 3.5 mill property tax was discussed that included the new taxable values from the auditor’s office.

“Three and a half mills would bring us in about $1.6 million, which would still be short for the transfers we are needing and the deficit we are seeing,” Schweitzer said. “If we went to five mills, the $2.3 million would cover the police and fire department but we would still have to take care of the debt service and street department.”

A 6.5 mills property tax would generate about $3 million and would cover all of the city’s expenses, but Schweitzer noted that would be a big property tax levy and the revenue would not grow as the economy grows and eventually the amount the city could collect would be capped with reduction factors added as well.

With the current income tax, the city is bringing about $5.4 million annually. The new levy with the 100 percent tax credit and one percent increase would generate about $7.9 million.

The city will be seeking support for the levy before it is placed on the ballot again for a vote. The main need for funding is to support police and fire departments.

Other options for promoting the levy were also discussed including eliminating the capital improvement plan funding and placing all the revenue generated into the general fund to give the city more flexibility on how to use the money.

The city plans to have meetings the public can attend to learn more about the levy and how the funds will be utilized to operate the city.

“We need to make sure that everyone understands how this affects them, not only the community, but individuals,” said Mayor Mike Stevens.

He said that everyone he has talked to about the levy were not aware of why the levy was needed.

“I don’t know what we need to do to get that information out there so that they can make an informed decision,” Stevens said.

City Manager Amanda Zimmerlin said she would like to present legislation to council at the June meeting so that the levy can be placed on the November ballot.

Fire Chief Brian Garver said that when police and fire personnel walked through the community to pass out flyers to about 1,500 homes in order to get feedback and provide information about the levy, the shocking thing is that when residents were asked if they received a newsletter from the city containing information about the levy, residents stated that they don’t usually read the newsletter.

“That was a resounding, repeated answer,” Garver said. “Do you get the newsletters? ‘Yeah, but we really don’t read all of it.’ So, getting the message out is difficult. The other part of that feedback was, ‘We will support police and fire. We don’t know about the city as a whole, but if it is for police and fire we are more in support of that.’ That is why you see staff putting together something that says police and fire.

“Police and fire is what residents are concerned about,” Garver added. “From the fire department standpoint, we held a meeting when the levy didn’t pass to have discussions with our staff to let them know what is coming down the pike.”

Garver said he has staff that is very concerned and they are watching the council meetings and paying attention to how local government is being run, something that never happened in the past.

“We’ve already lost some individuals, but we do have these people on board for the rest of the year. Just let us try to get this resolved and give us some time,” Garver said. “If we put this levy on in November that would help. If we push it off to next year, you are going to see a mass exodus in our departments. I don’t know if you are ever going to get those people back.”

Garver noted that once they leave and go someplace where they are comfortable or secure, even if Clayton passes a levy a year from now, Clayton would not be able to attract those same fire personnel back.

“If they do leave, how do you recruit people in an environment where we are short financially and we can’t pass levies? So, for us to put this off another year from the fire department’s standpoint, I have grave concerns if we do not make the decision to put this on the ballot in November. It is almost to the point that you will not have a fire department to come back to.”

Garver stressed that the city needs to make it clear to the elderly and retirees that the income tax will not affect them if they are no longer working.

Council was asked to decide on what option should be used in order to get legislation on the June agenda so that the levy could be placed on the November ballot and preparations could be made to promote the levy.

Reach Ron Nunnari at (937) 684-9124 or email [email protected].

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