Hamilton claims ‘financial distress’ in court documents

The court filing is the latest in Hamilton’s wrangling with cash-strapped St. Clair Twp. over an annexation law the township asserts entitles them to 12 years worth of compensation for money lost due to annexations through the years. STAFF FILE PHOTO
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The court filing is the latest in Hamilton’s wrangling with cash-strapped St. Clair Twp. over an annexation law the township asserts entitles them to 12 years worth of compensation for money lost due to annexations through the years. STAFF FILE PHOTO

Hamilton is in “financial distress” and layoffs are anticipated in the next several months, a sworn affidavit by a top Hamilton official to the Ohio Supreme Court claims.

“The city is in financial distress, the city estimates the limited reserves it has will be depleted by 2020,” Tom Vanderhorst, Hamilton’s executive director of External Services wrote in a court filing. “The city anticipates it will be required to reduce employees in the next several months in its continued efforts to reduce its expenses below its revenues.”

MORE: Hamilton planning to reduce staff, not services

The court filing is the latest in the city’s wrangling with cash-strapped St. Clair Twp. over an annexation law the township asserts entitles them to 12 years worth of compensation for money lost due to annexations through the years.

The Ohio Supreme Court denied the city’s request late last year to dismiss the lawsuit. The court issued a scheduling order that included evidence filing, hence Vanderhorst’s affidavit.

RELATED: High court says St. Clair v. Hamilton annexation lawsuit will proceed

The township’s legal advisor, Gary Sheets, said the fact Hamilton is apparently in financial distress has no bearing on its obligation to pay its debts.

“Does Hamilton really expect the Ohio Supreme Court to recognize a severe financial hardship is a complete defense to a debt?” Sheets told the Journal-News. “If it’s a good defense for the city of Hamilton to its debts, why shouldn’t it be a good defense to debts owed to the city like utilities and city income tax?”

City Manager Joshua Smith said it is early in the city’s budgeting process so he can’t say layoffs are a certainty, but they prefer reductions in force to come through attrition.

He confirmed the city has financial challenges, largely due to reductions in state funding over the past five years.

“We believe we will spend $4 million less in our general fund in 2019, compared to what we spent in 2008,” Smith said. “Every budget cycle becomes more difficult as we receive less revenue, while continuing to provide basic services our residents deserve. This must be balanced with maintaining our many fixed assets, ranging from equipment like fire engines to our streets.”

During budget discussions last year Smith discussed reducing staff by about 30 people over three years, through attrition. The projected general fund balance — the total general fund for this year is $47.1 million — at the end of this year is $5.1 million, the same amount the city started the year, according to the city’s financial records.

Despite the challenges, “here we are heading into 2018 on relatively solid footing,” Smith was quoted as saying in the Journal-News last November.

The lawsuit that prompted the recent financial discussion surrounds land Hamilton has annexed over the years from St. Clair, Fairfield, Hanover and Ross townships. In those annexations, the city did not get county commissioner approval for boundary adjustments, meaning residents in those townships should have voted for city council and township trustees, and the townships should have retained their property taxes.

However, the auditor’s office adjusted the boundaries and thus the taxes. The Board of Elections disallowed multiple jurisdiction voting as well because both believed the annexations were finalized.

When the city was told about a probe into the matter, it received permission from commissioners in October 2016 to create a “paper township,” which adjusted the city’s boundaries to include the annexed properties.

Sheets says that action triggered the law at issue.

Hamilton claims the land in question was annexed prior to a 2002 law that provides compensation to townships. The city also told the court in a motion to dismiss the township hasn’t presented any claims for which relief can be granted.

“The township alleges it has a right to lost tax revenues, yet it does not plead and has not presented a scintilla of evidence on what those revenues are, the properties from which the revenues derive or even the taxes that are to be applied,” Catherine Cunningham wrote for the city.

She went on to say the township has laid blame on Butler County auditors through the years “for not properly allocating and distributing inside millage over the past half century from territory where the township provided no services, had no electors and exercised no jurisdiction.”

“The township implored the city to ‘recognize a moral obligation’ to St. Clair Township to make amends for the financial loss here inflicted on St. Clair Township,” Cunningham wrote. “Such an obligation is not a clear legal duty under any theory.”

Smith said he cannot discuss the lawsuit.