CLEVELAND HEIGHTS, Ohio — Anticipated revenues for 2021 will only be budgeted at what was expected to be collected this year — before the arrival of the pandemic that skewed many projections.
At the same time, City Council earlier this month authorized $50.2 million in spending for next year’s budget, which will need to be revisited periodically in the coming year. This is up from the $48.3 million budget approved at the outset of 2020.
“The budget is still in need of tweaks — it will be a living, evolving document ‚” City Finance Director Amy Himmelein told council last month. “But from what I’ve seen so far, the economy appears to be having a better recovery than initially thought.”
With final close-out figures still to be compiled after the end of the year, any shortfalls in 2020 revenues were helped by nearly $4.4 million in funding through the federal Coronavirus Aid, Relief and Economic Security (CARES) Act, to help cover incidental expenses directly related to the pandemic.
Himmeli said that revenues will still need to be monitored closely in 2021, with City Manager Susanna Niermann O’Neil adding that council involvement will be needed with transfers in adopting a “straightforward” budget.
“We’re being realistic about 2021,” O’Neil said. “And we will need to sort out the realities as we go forward.”
Through it all, the city managed to upgrade its bond rating this year, largely on the roughly $10 million cash reserve that had been compiled in recent years. Himmelein would not rule out the possibility of some of those funds having to be tapped at some point.
“Right now, the expenditures are outpacing revenues by about $6.5 million, so we could be dipping into the reserve,” she said.
The city is looking at a possible $3 million increase in hospitalization costs in 2021, although half of that amount could be absorbed with $1.5 million in “pre-funding” authorized by council in the budget.
That set-aside is part of over $7 million in budget transfers for this year, including another $500,000 in pre-funding for the city’s capital program, namely for vehicle acquisition and building improvements.
About $8 million has been amassed in the city’s sewer fund, mostly through rate increases instituted to comply with a 2017 federal consent decree with the U.S. Environmental Protection Agency for violations of the Clean Water Act resulting from antiquated infrastructure in need of major upgrades, some of which are already underway.
For now, the sewer fund is classified under “may need observation” by Himmelein, who took over as city finance director in April.
“We know there’s a consent decree out there that’s going to cost us some money,” Himmelien said. “But a new rate study should help us create stability to cover those costs.”
Parking fund concerns
Already well into observation is the city’s parking fund, which was drawing scrutiny even before the coronavirus hit, leading to a…