Where Your 2018 Tax $$$'s Were Used in Summit County Cities?

Citizen Auditor, Loren Sengstock, has released a per capita analysis report of all thirteen (13)

cities and a separate report for municipalities in the 10,000 to 50,000 population located in Summit County, Ohio and . His credentials and experience in government finance and consulting on the implementation of governmental accounting, payroll, utility billing, and income tax administration systems in Ohio and Michigan have provided him with a genuine and original perspective on presenting a ‘Citizen/Auditor’s’ analysis of governmental financial reports. He is using that extensive experience in the creation of a unique graphical report that can be used by any ‘citizen/taxpayer’ to evaluate and compare the audited financial data of cities in Summit County on a per capita (per person) basis. Mr. Sengstock is bringing the governmental financial operations of these cities, at least in Summit County, down to an individual or a per capita perspective that will enlighten any ‘citizen/taxpayer’. The 2018 report is available now at www.citizenauditorohio.com in the Summit County, Ohio section of the website.

The report is created by inputting the Governmental Funds financial information from the audited annual financial reports available from the State of Ohio Auditor website into a database, then dividing the data by the U.S. Census population for each city to calculate a per capita database used in the creation of all the graphical presentations in the report. The Governmental Funds include the General Fund(s), Special Revenue Funds, Debt Service Funds, and Capital Funds (detailed definitions are provided in the report) were selected because they represent the combination of revenues (primarily sources are income taxes, property taxes, and intergovernmental revenue sharing), expenditures (by programs such as Public Safety, Public Service, General Government, etc), and other funding sources (includes Debt Issuances, Interfund Transfers, etc.). These funds are used by all local municipal governments to account for program expenditure categories such as Public Safety (Police, Fire, EMT, Dispatch), General Government (Administrative-Mayor, Council, Finance, Zoning, Building, Engineering, etc), Transportation (roads, sidewalks, etc) , Leisure Time (Parks, Recreation Centers, Fitness & Senior Centers, etc), and Capital Outlay (Capital Asset Projects – Roads, Buildings, Police/Fire Equipment, etc). [Governmental accounting terms can often be confusing so Mr. Sengstock has provided definitions in the transmittal letter of the report.]

The following is an example of one page from the 2018 report that reports on which city(s) in Summit County are collecting the highest to lowest amounts in combined per capita income taxes and property taxes. The combined average is $880 per capita for income taxes and property taxes collected in Summit County (a 7.8% increase over 2017’s $816). The highest combined per capita amount is in the City of Fairlawn of $1,784, followed by the City of Twinsburg with $1,268, and the City of Hudson has the 3rd highest with $1,180.

Reviewing this report will provide the reader with an informed understanding of the spending priorities of their local municipal government(s). Reducing the financial data to a per capita amount and then comparing that to the average spent, Mr. Sengstock is helping each ‘citizen/taxpayer’ better understand how and on what programs local governments are spending our tax dollars. The report also provides a factual financial basis in determining whether or not our elected representatives are using tax dollars in a cost effective manner? Evaluating the report can generate specific financial questions for the Mayors, Councils, and Administrators regarding their responsibilities in providing for accountability and transparency, along with whether they are being good stewards of our tax dollars.

Another example of valuable information is provided on Appendix ‘A’ – Page 3 of the report, wherein you can learn that the average per capita total taxes and other revenues collected in 2018 is $1,475 and the average per capita expenditures is $1,696. Does that mean on average that cities spent ($221) more per person than they received in revenues? Yes, it does, as a matter of fact; only the cities of Cuyahoga Falls, New Franklin, and Norton spent less than they received. The following cities made a valiant attempt to balance their budgets: Stow, Green, Hudson, and Macedonia. The remaining cities of Akron, Barberton, Twinsburg, Tallmadge, Fairlawn, and Munroe Falls all had deficits in Net Changes in Fund Balances. Deficit spending, due solely to large capital outlays for a year now and then, is understandable and often unavoidable. Repeated annual deficit spending in governmental operations year-after-year are avoidable and are indications of uncontrolled and therefore unsustainable spending which can result in fiscal crisis and regretfully fiscal emergency status being declared by the State Auditor, as far too many communities in Ohio have learned.

The City of Twinsburg for example, has not balanced their budgets for the last six (6) years; the 2018 Governmental Funds Balance of $947 per capita; this includes the General Fund that is currently projected in the 2020 Budget to have only $354 per capita remaining in the General Fund on 12/31/2020; that represents a 65.5% reduction of the $1,025 on 1/1/2016 per capita in General Fund savings! Fiscal Caution, Fiscal Watch, and Fiscal Emergency status happens quickly and re-building financial stability requires difficult decisions and sound financial leadership. Recovery from Fiscal Emergency generally requires 5-7 years and ‘citizen/taxpayers’ endure tremendous hardships and lost public safety and other services during that recovery. Twinsburg ‘citizen/taxpayers’ have received multiple alerts from Citizen Auditor, Loren Sengstock over the years. Twinsburg has the 2nd highest combined total income taxes and property taxes of $1,268 per capita which is 44% more than the average of $880 in Summit County; coupled with obvious spending problems has created a financial path that is unsustainable. Uncontrolled spending on the Gleneagles Golf Course Clubhouse, restaurant, and banquet facilities (including $7.138 million in long-term debt issued) has placed pressure on the General Fund for subsidies to resolve on-going deficits and can only be resolved by securing new tax increases from taxpayers. Until the Mayor and Council honestly address their unsustainable operational spending issues created over the last six years, the General Fund savings will continue to race towards zero, it is simple mathematics.

Recently the City of Twinsburg Mayor and City Council have discussed and proceeded towards increasing property taxes by a new 4.2 mills of inside Charter millage; and this action is being done without a vote of the people which they say is provided for in the City Charter. It remains to be seen whether or not the taxpayers/voters in Twinsburg will stand still for such an obvious fiscal boondoggle? It is always risky to issue long-term debt without a voted and dedicated tax source and Twinsburg taxpayers will be learning that first hand, very, very soon. More on this fiscal analysis will be addressed in future articles.

Each community in this report also has a revenue and expenditures graphical analysis compared to the county average. The following is an example of the City of Twinsburg’s revenues and expenditures by program group(s). It shows where the Mayor and City Councils spending priorities are and how they compare to the county averages:

As ‘citizen/taxpayers’ we must educate ourselves to stay informed and better understand our government and its fiscal stewardship. This per capita report is an excellent first step in fulfilling our duty to be informed and aware of what our government is doing with our tax dollars. Thomas Jefferson was known to have said ‘Information is the currency of democracy’, so be informed or you run the risk of being short changed!

There is a vast amount of data and information presented in this report and it will take many articles to explore it fully and absorb all that it contains. So keep watching for more articles in the future…….

Loren Sengstock, Citizen Auditor

www.citizenauditorohio.com

(330) 888-9459