Bowling Green’s finances are hoped to be good through the end of the year – but the question remains how economic conditions will be next year and beyond.
Council’s finance committee last week received a quarterly financial update from finance Director Dana Pinkert.
Pinkert said that the city has collected $12.78 million in income tax in the first half of the year ending June 30 — more than $671,000 over estimates for the year and 5.56% over 2021 collections during the same period.
“We’ve exceeded that for the year already,” she said. “We are ahead of the game, and if it stays like this – we can hope it stays like this – historically the last half of the year we really are right at that 50% mark, so it’s reasonable” to believe that the city will end with collections above what was budgeted.
Pinkert provided a chart of where each $100 of income tax collected by the city goes. The single largest amount – $37.50 – goes to the general fund, which provides for a variety for city services.
Of the rest, $25 goes to water and sewer capital improvements, $18 goes to the fire fund, $7 to the police fund, $6.25 to capital improvement, $3.75 to street repair, and $2.50 to recreation.
Pinkert noted that the fire and police funds are “extra ballot issues to fund extra firefighters and police officers, so those are required to go into a separate fund.”
“Everybody’s talking about inflation,” Pinkert said as she spoke about budget considerations. “Over the last 12 months, the (Consumer Price Index) has increased over 9% before seasonal adjustments. … So we’re watching that, and we’ve seen some of that,” specifically in fuel bills each month, and “it’s like an immediate impact.
“It seems like the departments might be pulling back on some of their spending just based on the numbers quarter-to-date and what our budget is.”
She said that a supplemental appropriation is expected in September, and would come from fund balances.
The city is also still seeing supply chain shortages, Pinkert said, though she noted that she’s recently been notified that some of the vehicles the city has ordered are finished or ready to be delivered.
“We’re seeing some increases in some of the estimates we had from capital projects,” she said, noting she’s had conversations with Mayor Mike Aspacher, Municipal Administrator Lori Tretter, and Public Services Director Joe Fawcett about funding for some projects if the contracts come in high.
Utilizing fund balances or borrowing are the two options.
The recent increases in interest rates from the Federal Reserve, Pinkert said, are a double-edged sword – it’s good for the city’s investments, but makes their borrowing costs higher.
“Though the end of the year, I’m cautiously optimistic,” she said, “that we’re fine through the end of the year as far as being able to fund some of our inflationary items and things we’re going to need for our appropriations and getting through the end of the year relatively healthy.”
She’s more concerned, however, to see how things will be affected next year.
For instance, currently unemployment is relatively low now, which is a positive, but there are still more jobs open than there are people to employ, “so that’s a staffing issue for us.”
“So we’re just watching them,” Pinkert said, “and I hate to keep saying that, but we really are.”
Answering a question from Councilman Greg Robinette, chair of the finance committee, Pinkert reiterated that she is optimistic that the income tax receipts for the year in the second half will beat estimates. The income taxes are coming in healthily, and the city knows there will be some inflationary costs, so she is confident that it will balance out.
“It’s looking forward to next year that’s the challenge,” she said.
