Archive for Mariemont Finances

Missed Opportunities come home to roost

Missed Opportunities come home to roost

Village Residents that follow the political landscape in Mariemont are dismayed that Mariemont was ranked 28th among the suburbs in Greater Cincinnati by Cincy Magazine. Let’s try to sort out why Cincy Magazine might make this assessment. It certainly does not relate to our school system or safety services. Indeed, Mariemont is a safe, walk able community with many amenities that make it an outstanding place in which to live and raise a family.

Perhaps, our high comfort level with the way things are may breed complacency that fosters an acceptance of the status quo. In business school parlance, the residents of Mariemont might be “dumb, fat and happy” so why change or become circumspect as to why Cincy Magazine does not rate us amongst the very best suburbs? Maybe it may relate to the management of Village finances and strategic planning during recent years.

In 2014, the Village posted a General Fund budgetary loss for the first time in many years of $28,652. Also, the Permanent Improvement Fund or Capital Fund notably decreased by $183,272.  Taken by themselves, these losses are fairly modest but they do suggest a downward trend in Village finances.

The financial position of the Village has been and will be impacted by the following factors.

  1. The loss of Ohio State estate taxes and subsidy that historically produced about $250,000 in annual revenues. Indeed, Governor Kasich has balanced the Ohio State budget by cutting back on the funds that the local communities receive from the State.
  2. The missed opportunity to form a JEDZ with Columbia Township which probably would have produced over $200,000 in unfettered annual revenues. This directly led to the formation of a JEDZ between Columbia Township and Fairfax.
  3. The possible winding down of Kellogg operations in the business district that would put $600,000 in revenues at risk (about 18 percent of the total budget).
  4. The continued maintenance of a fully-equipped independent Police, Fire and EMS service without sharing these services with surrounding communities.

With these threats to Village income, what is left to cut to balance the budget? At this time, it appears that the Village is poorly positioned to meet the coming financial crunch without higher taxes.

In retrospect, when the Village was flush with revenues during the past ten years, many strategic initiatives could have been undertaken to enhance the standing of the Village amongst the suburbs in Hamilton County. These might have included:

  1. Give financial support and incentives to rejuvenate the Historic District
  2. Plan and build a parking garage to alleviate the shortage of parking
  3. Renovate the Municipal Building
  4. Develop the South 80 into a recreational destination
  5. Hire a Village Administrator
  6. Work with surrounding communities to save money by sharing services
  7. Put in place a plan for a community center
  8. Use creative financing to foster business development

When I first heard that Mariemont was ranked 28th among the suburbs in Hamilton County, I was incredulous. However, this ranking does point to the fact that the status quo may not be good enough.

Mariemont Permanent Improvement Fund. Do the Math!

What’s In Store for the Mariemont Permanent Improvement Fund?  Do the Math!

In the January 2014 Mayor’s Bulletin the Permanent Improvement Fund (used for street improvements, capital equipment purchases, trees, swimming pool, tennis courts, municipal building, etc.) was highlighted as an indicator of the strength of Village finances, having a $715,453 balance in the fund at the end of 2013. Now we find out in the February 24, 2014 Council Committee of the Whole meeting to discuss the 2014 Permanent Improvement Budget that the balance included $455,500 already reserved for future expenses ($255,500 for the 2015 payment of the fire truck and $200,000 for improving the Village Administration Building). The real picture of the ending balance for 2013 was the fund actually only had $260,000 in unreserved funds available. Also acknowledged in the meeting was that  $83,500 in encumbered funds (committed funds not yet paid) for the 2013 dump truck ($78,500) and auditor fees ($5,000) had to come out of the total, leaving $176,500! This is far from the rosy picture painted in the Bulletin. By adding the anticipated revenue of $350,000 for 2014, this gives the Village $526,500, so everything seems fine, right? Let’s look at the math.

At the February 24 meeting, the department heads outlined their capital and equipment needs for 2014. What’s the impact on the Permanent Improvement Fund and its balance if they are all approved?

Department Request Cost Fund Balance
Balance 12/31/2013  $715,500
Fire Truck Reserve 2015 Fire Truck Payment Reserve 255,500  $460,000
Admin. Bldg. Reserve Admin. Bldg. Improvement Reserve 200.000  $260,000
Maintenance Power washer, front loader, leaf vacuum, trees ($30K) 66,000  $194,000
Police Car, revolvers 34,100  $159,900
Fire 2014 Fire truck payment and misc. 276,200 ($116,300)
Tax Computers and software 17,800 ($134,100)
Recreation Tennis court repairs and misc. 13,600 ($147,700)
Streets Infrastructure improvements 85,000 ($232,700)
Encumbrances 2013 Dump truck payment , auditor fees 83,500 ($316,200)
2014 Levy Revenue Estimated revenue from levies 350,000 +$33,800


Reserves, encumbrances and current needs overwhelm the funds available. Will Village leaders fulfill requests and drop the reserve funds all the way down to $33,800 or will they start deferring maintenance, delaying replacements, picking and choosing which needs get funded? Maintenance stated in the February 24 meeting that it needs to replace two dump trucks. It requested one at $75,000 but the request was deferred to have the fire department purchase a Gator (golf cart style vehicle) for use in the South 80 acres in the event of a need to transport a patient.

What will happen to the fund in 2015 and beyond? Will the Village have the funds to sustain the ongoing needs for improvements and new equipment? Hard thought needs to be given to where the Village is headed, if you do the math.

Mike Lemon

A Closer Look at Mariemont Finances

“Lipstick on a Pig?”

To put “lipstick on a pig” is a rhetorical expression, used to convey the message that making superficial or cosmetic changes is a futile attempt to disguise the true nature of a product” – Wikipedia

When I first read the latest “Mayor’s Bulletin” (Jan. 2014), responding to my editorial article in the Eastern Hills Journal on the financial status of the Village, the “lipstick on a pig” phrase came to mind. The numbers and information presented in the bulletin certainly make the financial picture look rosy and solid to the untrained eye. But let’s look a little closer at what’s been presented, or better, what has not been presented.

The article touts the ending 2013 General Fund reserves increased $44,000 over 2012. Back in July 2013, the Village Clerk was projecting 2013 and 2014 to be deficit years but the mayor announced in a budget meeting a future estate tax receipt of $318,000 which would offset the deficit. The actual estate tax numbers for the 2013 were $246,195 in the General Fund and $146,334 in the Permanent Improvement Fund, or $392,529 total. If not for these estate tax infusions, the General Fund would have again incurred deficit spending as the Clerk projected, in the amount of $201,826 and the reserves would have been $1,114,278 at the end of 2013 instead of the stated $1,360,473 (an 18.1% difference). But left unsaid, based on current spending trends, is what will the General Fund reserve look like at the end of 2014, 2015 and 2016? No comments are made or numbers presented in the article about the future outlook and financial projections now that the estate tax is gone. Just the ending figures for 2013 are shown, a point in time, not a trend or forecast.

The Permanent Improvement Fund was highlighted in the article as a financial strength of the Village. Without the estate tax infusion of 2013, this fund would have been $569,119 rather than the $715,453 shown (a 20.5% difference). What is left unsaid is this fund can be used only for capital improvements and not for services such as police, fire and general operations. It’s the operating costs that are paid by the General Fund that is the major problem, not capital improvements. Although this fund is portrayed as being strong, left unstated are the payments for the new fire truck and the effect these will have on the amount of reserves. The remaining cost of the fire truck purchase alone is about $260,000 a year in 2014 and 2015 against a levy that brought in average revenue of $350,000 the last two years. That leaves about $90,000 a year available for all other capital improvements and equipment. (The article states the fund is used for “street improvements, trees, swimming pool, tennis courts, Municipal Building, etc.“)  These categories have averaged about $350,000 in expenditures over the last four years. And council just supported a $248,000 street improvement project for 2014, on top of paying the next installment payment for the fire truck. Are we going to defer street repairs, our tree program, our pool or our parks to pay for the new fire truck or will the $715,000 reserve at the end of 2013 just steadily drop in the next several years? Difficult decisions are ahead.

The article states “Always Looking Toward the Future.”  With 2013 being the last time estate taxes will be received, there is still a looming shortfall in General Fund revenues. Many of the new sources identified in the article have already been included in the 2013 revenue (one or two Greiwe condo buildings and the earnings taxes on those residents and 100 Kellogg’s employees). The article also identifies the Waldorf School as an additional revenue source for real estate taxes but the school is a non-profit tax-exempt institution. Without estate taxes or additional revenue streams, the General Fund reserve is going to start dropping unless spending is cut or taxes raised.

The article next identifies “Steps Taken to Reduce Expenses.” It speaks to actions taken but not to the results of those actions. It states that over the past several years, staff was reduced from 25 full-time employees to 20. However, in the July 8, 2013 Budget Meeting Minutes the number was stated as 18. One would expect wage and benefit costs would have decreased significantly with a 20% reduction in staff. But Village Annual Financial Statements show Wage & Benefit costs in the General Fund jumped from $2,252,970 in 2012 to $2,466,767 in 2013, a 9.5% increase. Even if one looks at the last three years, the reduction in staff still resulted in an increase of 12.2%.

The article further states three additional full-time firefighter positions were eliminated and the police chief and fire chief positions were consolidated as a step taken to reduce expenses, saving $200,000. A review of firefighter wages and benefits shows General Fund expenses dropped $112,042 between 2009 and 2013 and the Paramedic Fund expenses for wage and benefits dropped $59,024 for a total of $171,066. Consolidating the police and fire chief position apparently saved only $28,934. The fire chief was paid significantly more, so where did the additional savings claimed by the mayor go?

The next cost saving identified was elimination of Village employee annual incentive bonuses. The amount of money “saved” by the elimination was not identified. Incidentally, these “bonuses” were intended to reward employees for outstanding performance and not as automatic annual payouts. Despite this elimination, wage and benefit costs still continued to increase, as identified above.

In conclusion, the “Mayor’s Bulletin” article states: “As anyone can see by the ending balance on the Treasurer’s report above, the steps we have taken have been and will continue to be effective in combating the cuts made by the State.”

Really? Please pass the lipstick!

Mike Lemon
Former Mayor and Councilman


For more about Mariemont Finances by Mike Lemon, visit this post

What’s the Future for Mariemont Finances?

What’s the Future for Mariemont Finances?

“Mayor Policastro said he has never seen such a strong budget as this one over the last 20 years. It is amazing how well we have done in the adversary (sic) climate that we have been up against. Most small municipalities except for Blue Ash and Evendale are having huge problems and we are not.”

Mariemont Budget Hearing Minutes – July 8, 2013

The financial picture for small communities in Ohio has been greatly impacted by state cut-backs, elimination of the estate tax and elimination of personal property tax. Mariemont is no exception and the picture is not as rosy as portrayed by Village leaders.

Over the last ten years, Mariemont spent more money than it received in the General Fund (which pays for Village services) in years 2003, 2004, 2007, 2008 and 2009. The Village Clerk was projecting 2013 to be a deficit year also but the mayor announced a future estate tax receipt of $318,000. If not for estate tax infusions of $1,219,200 in 2005 and $378,668 in 2010, these years and 2013 would have been deficit years as well. The following chart reflects actual figures published by the Village in its annual reports:

Year Receipts Disbursements Net Change to
General Fund
General Fund Reserve
2003 2,855,086 2,954,912 (99,826) 1,632,500
2004 2,672,499 3,160,566 (488,067) 1,144,433
2005 3,673,446 2,973,182 700,594 1,845,028
2006 3,199,006 3,174,256 24,750 1,869,780
2007 3,249,331 3,453,861 (204,530) 1,665,249
2008 2,995,250 3,392,499 (397,249) 1,268,001
2009 3,053,116 3,311,239 (258,123) 1,009,877
2010 3,117,917 3,101,268 16,649 1,026,525
2011 3,091,361 3,013,484 77,877 1,104,000
2012 3,267,644 3,055,981 211,663 1,316,104

Fortunately, General Fund reserves, two years of unusually high estate tax receipts and the temporary infusion of construction worker wages from the Greiwe condominium developments compensated for the deficit spending. However, with the continued revenue cut-backs by the State and the elimination of the estate tax this year, there will be no “white knight” to march in and financially save the Village from deficit spending. Reserves will continue to decline. If the spending is left unaddressed or there are no new revenue streams coming on-board, the Village could face “fiscal emergency” status by the State Auditor in several years.

Over the past ten years, the Village collected $3,370,347 in estate taxes. If there had been no estate tax, the Village would be $2,054,243 in debt at the end of 2012 rather than having $1,316,104 in reserve. This provides a magnitude of the problem and the level of revenue needed to offset the deficit spending coming. So what is going to happen in Mariemont over the next ten years with no estate tax? The income from a Joint Economic Development Zone (JEDZ) partnership with Columbia Township would have been a great start toward a solution. Shared services might also be a way to help reduce costs.

Communities have known for five years the cut-backs were coming and had ample time to plan for adjustments. Although it is late in the game, Village leaders need to start working on how to address the anticipated shortfall. They can no longer ignore the “train barreling down the tracks.”

Mike Lemon