Avon Lake Economy Steady Thanks to Cash Reserves and Belt Tightening

Avon Lake income tax revenues have stabilized and are on track to return to pre-recession levels this year.

In 2007, the city collected $9.9 million in total income tax collections. When the city reaches that number again, finance director Nancy Bryan will consider the city fully recovered from the Great Recession.

“I don’t know if we’ll match it (this year), but we’re getting closer, which to me, as long as we’re moving in that direction, we’re getting healthier,” Bryan said.

As of June, the city collected $5.98 million, up 5 percent compared to that time last year. Bryan said the city budgeted for $9 million but because of better than expected revenues is hoping to finish the year at $10 million.

The city has a 1.5 percent income tax rate and total revenues were about

• $8.7 million in 2008,
• $8 million in 2009,
• $7.8 million in 2010 and
• $9.3 million in 2011.

About half the city’s general fund comes from income taxes, so lower income tax collections means the city has less money to provide the same city services.

After serious consideration, officials decided to that will save the city $350,000 in 2012 and $700,000 in 2013. They also put a on the November ballot that, if passed, will be a source of revenue for emergency services, thereby leaving more money in the general fund.

“There’s going to be a small financial impact to the residents because of those two things, but there’s not going to be a loss of services, which I think is a very good thing,” Bryan said. “I think this community is weathering the storm very well.”

More tough times ahead

But Mayor George Zilka explained weathering the recession wasn’t easy, growth is slow and more tough times are ahead.

“We have to look at ways to modify, change government and the services that we provide,” he said. “We have a lot of work to do in the next several years to keep our city functioning, to keep our infrastructure in place. We’re concerned about the streets, the maintenance and repairs of streets.

“We’d love to see the economy grow, but the realities are we’re looking at some more cutbacks before we see things stabilizing,” he said. “We can only hope the economy’s going to recover enough to replace the dollars that we’re losing.”

City officials have tried to keep the financial situation stable by keeping costs level. The city negotiated a union contract through 2013 with no wage increases. Officials are closely monitoring part-time staffing levels and are reducing the number of full-time employees through attrition. The city has six fewer employees than it did five years ago, five of whom were in the service department.

Zilka is concerned whether the department will be able to cover the ground it used to during a major snowstorm.

“It’s possible we will not be able to get to the streets that we have in the past,” he said. “We have to make a judgement here as to what’s in the best (interest) to the residents. We know they don’t want tax increases. At the same time, they expect services, so we’re trying to balance that.”

Something else the city has done amid declining income tax revenues is tap into cash reserves to make up the difference.

“The impact is, now we have lower cash reserves in 2012,” Bryan said. “We are being forced to borrow for several projects. The good thing is, the interest rates are so low right now. It’s a good time to be borrowing.”

The city recently refunded, or refinanced, its debts and for a savings of about $685,000, which will ultimately save taxpayers money. At the same time, the city is also working with a financial analyst to create a five-year financial plan.

A boost to the plan came with Ford’s announcement that it would keep open for at least four years and maintain much of the current workforce. Two large unknowns to that plan are what will happen with and the new Interstate 90 exit .

Zilka expects there will be much commercial development and housing around the interchange. That will affect traffic flow to and through Avon Lake. Other nearby economic developments include , which may help Avon Lake with property values. Zilka knows some employees who have already moved and suspects more will follow.

Zilka suspects some employees at the may consider relocating, or at least take advantage of available services like exercising at , where Zilka’s wife has seen a number of Clinic employees.

The city is also working on a four-part economic development plan:

• establishment of a to refund businesses part of their income tax revenue for their continued growth,
• secure funding for a Community Investment Corporation that would allow the city to make short term no- or low-interest loans to businesses,
• hiring a grant writer to secure federal and state monies for specific projects and
• hiring a part-time business liaison to reach out to local businesses.

“We understand that we have a niche in the economy,” Zilka said. “We are not going to attract big box stores because Avon is the more ideal location. What we hope to do is shore up the businesses that we have and promote the locations that we have that would be ideal for businesses that focus on serving neighborhoods and local needs.

“We don’t know what the future will bring. It’s going to be interesting.”

Editor’s Note: In this series, Patch gauges the recovery of 18 Ohio communities based on income tax receipts since the Great Recession. Read about