Portage Redevelopment Commission OKs expenditure
By John Robbins Post-Tribune correspondent August 4, 2012 6:58PM
Updated: September 6, 2012 6:20AM
The Portage Redevelopment Commission has authorized the expenditure of up to $1.727 million to help pay for city of Portage operating expenses that would normally be paid for with property tax revenue.
Without the help from the Redevelopment Commission funds, the city of Portage would be out of cash by October, according to Portage Clerk-Treasurer Christopher Stidham.
“I don’t want to leave the impression of being a Chicken Little and saying the sky is falling,” Stidham said. “In reality we can’t let that occur, so we’ll be using Redevelopment Commission and Utility Board funds to shore up the general fund.”
The money will be used to pay for employee medical expenses through the end of 2012, and bond and equipment lease payments that would have been paid by the economic development income tax fund of Portage. This allows the EDIT fund money earmarked for bond and lease payments to be spent on city operating expenses.
Stidham likened this stop-gap approach of city financing to a family raiding their children’s college fund to pay for a night on the town — long-term funds for investment are being used to pay for short-term operating cost. “It’s taking away from development and infrastructure improvements,” he said.
Portage City Council President Sue Lynch is an outspoken critic of using Redevelopment Commission funds to pay for city operating expenses.
“I don’t believe the Redevelopment Commission is an appropriate source of funds for some of these requests,” she said. “We begin chipping away at redevelopment funds for non-development purposes. I want to make sure the money is in the budget in the first place.”
Utility Board funds are already being used to pay for five Street Department and two city hall employees, according to Stidham. They have also been used to pay for city equipment purchases. The Utility Board is funded with a combination of storm-water and sanitary sewer user fees.
Redevelopment Commission funds have been used to make equipment lease payments, bond repayments and purchase of dump trucks.
This past spring, the Redevelopment Commission provided a five-day loan to the city while the city was waiting for property tax payments from the county.
There have been other occasions when money has been granted the city by the Redevelopment Commission, said John Shepherd, finance adviser to the Redevelopment Commission. These grants come from a separate fund the commission maintains that did not originate directly from local property taxes, according to Shepherd.
Whether the funds come as grants or loans, “It’s not the best way to run a city. What we need to do is get the budget right,” Stidham said.
Budget year 2013
The Redevelopment Commission action to authorize money for the city now avoids the appearance of a fiscal crisis later in the year. While not advocating a crisis, Stidham thinks a request later in the year could have served a purpose by keeping department heads focused on the financial issues while working on their budgets for 2013.
Budget preparations for next year are well under way. Stidham said while progress is being made, there is still a projected $1.5 million deficit for 2013. The Street Department shortfall is about $500,000, but the largest deficit is found in employee medical expense projections.
Stidham said the key to getting future budgets under control is getting employee medical expenses under control.
For 2012, employee medical expenses are projected to exceed the budgeted amount by $1.7 million and that is expected to grow to $1.8 million for 2013, Stidham said. Employee medical expenses costs are 20 percent of the total $25 million city budget, the largest budget item after payroll.
Stidham has outlined an employee medical benefit “flex-plan” that could save the city $600,000 in 2013. It’s no homerun, he acknowledges, but it’s a start.
Other long-term budget cutting strategies have been advanced, including Mayor Jim Snyder’s proposal to automate residential garbage pick-up services.
A recent change in the city’s health insurer is projected to save up to $500,000 each year, according to Snyder, but that, too, had its downside, requiring renegotiating the firefighters’ union contract.
Until other savings can be identified and implemented, Stidham sees no alternative to use of Redevelopment Commission and Utility Board money.
“We need one more year of being on the drug. It’s easy, it feels good, but it keeps us from making the decisions necessary to make this a better community overall,” Stidham said.