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