Deficit spending and decreased tax revenue has Wellington’s general fund on pace to fall under what’s considered acceptable by village officials.
To start 2017, reserve money in the fund — the main account that provides money for Wellington’s day-to-day operating expenses — totaled $736,000. By year’s end, the balance could fall somewhere between $618,000 and $458,000.
Officials expect to spend $2.9 million from the fund this year and bring in $2.8 million, a loss compounded by municipal tax collection being down by just over six percent.
“We feel some of the production is down from our industrial customers,” said village finance director Vanya Hales. “That’s what’s led to lower tax collection numbers. We don’t know that for sure yet but it’s it’s not an unlikely scenario.”
Village manager Steve Dupee said the minimum acceptable threshold for the general fund is $500,000 or two months of operating expenses.
He said the village will reach out to business owners to determine whether lower revenue is the root cause of shrinking tax collection.
“Meeting with our largest employers has been something I’ve wanted to do since taking on this new role,” he said. “We want to see if there’s anything the village needs to be aware of. That’s just one part of tackling this problem, though. We’re just looking for anything in changes in their processes. We haven’t seen much of a reduction in tax collection from residents.”
As it stands, 25 percent of tax collections are transferred to the village capital improvement fund, a measure Dupee said could me modified or done away with if needed.
“That’s not a permanent solution but it’s something the village could do on a temporary basis,” he said. “It shouldn’t be the ultimate fix, in my opinion.”
He also pointed out the village could end up not expending its entire general fund budget in 2017.
“The village typically doesn’t spend the entire projected budget,” said Dupee. “That would have an immediate positive effect on the ending balance. The projection of $458,000 assumes we will spend the entire budget.”
At the start of this year, $100,000 was transferred from the general fund to the sewer fund. The outcome of an ongoing study gauging the need for a rate increase for water, sewer, and storm sewer services could end up expediting repayment of that money back to the general fund.
Every year, 5.5 percent of revenue from village utility funds are transferred to the general fund.
“The ultimate outcome of that rates study will include a repayment of that loan to the general fund over three or four years,” said Dupee. “It’s important to know we passed a balanced budget but we needed to ensure there were funds available to operate our sewer utilities.”
“There was an increase in sewer rates in 2014, but they’ve proved to be inadequate for what was needed to keep that fund where it needs to be,” he said.
Jonathan Delozier can be reached at 440-647-3171 or @DelozierNews on Twitter.
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