Fairfield Township will go broke by 2018 unless residents pass a new safety services levy or trustees make cuts to the fire and police departments, said Ken Geis, the township’s interim administrator.
Geis on Wednesday recommended the levy to township trustees during their regular meeting. No decision has been made yet, but if projected balances hold, the township will be insolvent by 2018 and at risk of going under fiscal watch, he said.
The problem stems from the fact that since 2012, the township has transferred more than $1.7 million from the general fund to the police and fire departments to cover budget shortfalls. Expenses have been outpacing revenues in both departments since 2011, Geis said.
Police expenses, including salaries and equipment, were just short of $3 million in 2013, while revenues were about $2.2 million. The fire department had similar figures in 2013, Geis said. The township transferred about $350,000 from the general fund in 2012 for the fire department, $1.1 million in 2013 for fire and police combined and about $300,000 so far this year for the police department.
The township’s finances are strong now, with a Aa2 bond rating from Moody’s, the second highest rating possible and an indicator of good credit risk, and a projected balance of nearly $4 million this year after expenses. However, that’s down from the 2011 balance of $6 million. Projected balances show the general fund gradually diminishing until it dips near or below $1 million in 2018.
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Ongoing safety service levies fund the police and fire departments approximately $2 million each year. The police levy was passed in 2000 and the fire levy was passed in 2008. However, those funds are no longer enough to sustain the departments, Geis said.
If the general fund depletes, “that will reduce your bond rating,” Geis said. “When you reduce your bond rating, catastrophic things happen to the township because that could result in a call on the debt … It you will put you into fiscal watch and ultimately, fiscal emergency.”
Being placed in fiscal emergency would prompt a state takeover, meaning trustees would have no direct say in how the township budgets its finances.
The township could also reduce staff in its fire and police departments, which employ about 80 and 25 people, respectively, or close one of the two firehouses on Morris and Tylersville roads. However, that would reduce the level of service the township’s 17,000 residents have come to expect, Geis said. The township could also contract the services to an outside entity such as the Butler County Sheriff’s Office, but that might also mean reduction in service.
For those reasons, Geis recommended a new safety services levy that could be on the ballot as soon as early next year. How much the levy would cost taxpayers in not yet known. A 2.4-mill levy would put the township on break-even ground by generating $1 million annually, township officials said, while a long-term 10-year minimum levy of 4.8 mills would generate about $2 million a year.
It’s too late to put such a levy on the ballot this year, but next year is a possibility, said Trustee Shannon Hartkemeyer.
“The township is not going to go to fiscal watch on my watch,” she said.
Trustee John McGinnis added: “We’re headed to the point of no return. We need to show that we’re doing everything we can to control our spending and reduce our costs, but I do believe we’re going to need to approach the voters and ask them to tell us, ‘Do you want to maintain the same level of service that you get today, or do we need to reduce those services to get our finances in order?’”
Geis noted the trustees have implemented a number of cost-cutting measures such as hiring a law director, Lawrence Barbiere, to replace Jack Grove. Grove, who had been the township’s law director for about 16 years, was charging $315 per hour for his services, while Barbiere charges about half that, at $150 per hour, Hartkemeyer said.
But Geis warned that “in a township of this size, you just can’t cut yourselves into prosperity. It’s just impossible to do that.”
Trustee Terry Scharnhorst said the the previous board of trustees, of which he was part, started transferring from the general fund to avoid taxing residents still dealing with the struggling economy. However, they also knew they couldn’t rely on that strategy permanently.
“We wanted to put off a levy for as long as we possibly could. You can’t take money from people that just don’t have it. Things are easing up a bit now, but that wasn’t the case two years ago … nobody would continue to take money from the general fund. You can’t do it,” Scharnhorst said.