Fostoria plans layoffs if November levy fails

March 30--FOSTORIA -- A commission tasked with overseeing Fostoria's finances approved a recovery plan Wednesday that calls for the layoff of more than a dozen employees if a 6-mill property tax levy fails in November.

The five-year plan is the city's second attempt, as the financial planning and supervision commission rejected its first iteration in January -- in part because of its heavy reliance on tax increases. That version called for both a quarter-percent income tax increase and the 6-mill property tax levy.

The financial recovery plan is needed because the city was placed in fiscal emergency in May by State Auditor Dave Yost.

The plan approved Wednesday includes nearly $3.2 million in cuts over five years -- an additional $2 million in cuts compared to the previous plan's recommended $1.2 million in budget reductions, said Belinda Miller, chief project manager for the auditor of state's office.

"For anyone who thinks they didn't make cuts, they just weren't listening," she said.

VIDEO: Blade Briefing, Nolan Rosenkrans on Fostoria financial plan

Built into the plan are two actions by council in recent months: one that is already increasing revenue, and another that would if approved by residents. Council in December approved the phase out of income tax reciprocity -- meaning residents who work outside Fostoria won't be credited for paying income tax elsewhere. Instead they'll pay the tax to the city where they work and the one where they live.

Reciprocity was reduced 50 percent starting Jan. 1 and will be eliminated the same date in 2018. The city is projecting a $250,000 increase in income tax revenue this year compared to last year.

Last week, council voted to place the 6-mill levy on the November ballot, although some members had wanted a 4-mill levy instead, Councilman Doug Pahl said.

If approved, the five-year levy would raise about $3.2 million. If the levy fails, however, the city will be making a similar amount of additional budget cuts, with most of that in staff reductions to the police and fire department.

Water rate increases are anticipated in 2019, 2020, and 2021, according to the recovery plan, although Ms. Miller said those aren't guaranteed.

"Those can be evaluated every year and not be raised if we are in a better position down the road," Mayor Eric Keckler said.

The city's general fund decreased from about $8.5 million to about $6 million in the past eight years -- a major factor in the fiscal emergency designation.

Among cuts to the budget are the closure of the city's pool, elimination of the police dispatch unit, and reduced health insurance increases.

Quentin Potter, who leads the commission and represents the Ohio Office of Budget and Management, reminded commission members Wednesday that a financial recovery plan cannot rely on revenue that has not been approved by voters. Wednesday's vote included a stipulation that the city eliminate up to 15 employee positions in January if the levy fails.

The financial commission includes representatives of the state treasurer's office, the Office of Budget and Management, the mayor, a city council representative, and three members appointed by the governor. All OK'd the plan Wednesday.

Contact Nolan Rosenkrans at: nrosenkrans@theblade.com or 419-724-6086, or on Twitter @NolanRosenkrans.

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