Budget Commission Regular Meeting – May 20, 2024
Meeting Details: The Geauga County Budget Commission met in Regular Session on Monday, May 20, 2024 at 10:00 am in the Auditor's Conference Room, 215 Main Street, Chardon, Ohio. This meeting was in person with a virtual option via MS Teams.
Meeting Attendance: Treasurer Chris Hitchcock, Prosecutor Jim Flaiz, and Auditor Chuck Walder.
Staff Attendance: Chief Deputy Auditor Ron Leyde, Deputy Auditors Tammy Most and Kristen Sinatra, and Fiscal Office Manager Pam McMahan.
County Staff: Geauga County Budget and Finance Manager Adrian Gorton (virtual).
Members of the Public: This LWV Geauga Observer (virtual).
The meeting was called to order at 10:04 am.
Minutes: Minutes from the Regular Meeting on May 6, 2024 were approved and are available here.
The following Revenue Certifications were approved:
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Berkshire Local Schools - Amendment #7. $24,537,733.55 in the general fund, $3,844,277.60 in special revenue funds, $1,438,469.49 in debt service funds, $3,377,836.59 in capital project funds, $849,134.62 in enterprise funds, $481,168.08 in internal service funds, and $178,821.32 in fiduciary funds for a total of $34,707,441.25. Appropriations do not exceed revenue.
Berkshire’s amendment certified an increase in tax revenue in the general fund of $1,722,600.80, two increases and two decreases across several special revenue funds resulting in a net adjustment of -$714.24, and an increase in capital project funds of $2,300,000.
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Claridon Township - Amendment #4. $951,140.59 in the general fund and $1,965,796.27 in special revenue funds for a total of $2,916,936.86.
Claridon’s amendment reflected an increase of $10,000 to create a new joint fire equipment special revenue fund.
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Bainbridge Township - Amendment #5. $4,230,348.65 in the general fund, $19,197,476.84 in special revenue funds, $2,015,383.34 in debt service funds, $2,497,440.76 in capital project funds, and $539.02 in fiduciary funds for a total of $27,941,188.61. Appropriations do not exceed revenue.
Bainbridge’s amendment certified an increase in special revenue funds of $424,576.95 and an increase in capital projects funds of $793,500 to set up three reserve funds: general fund capital reserve ($344,000.00), road fund capital reserve ($250,000.00), and police fund capital reserve ($199,500.00).
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South Russell Village - Amendment #5. $1,873,997.81 in the general fund, $7,767,074.11 in special revenue funds, $1,607,330.46 in capital project funds, and $210,299.54 in fiduciary funds for a total of $11,458,701.92.
South Russell Village’s amendment reflected a capital project fund increase to pay for paving on Bell Road.
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Geauga Trumbull Solid Waste - Amendment #2. $5,598,885.59 in the general fund and $138,517.34 in special revenue funds for a total of $5,737,402.93.
Geauga Trumbull Solid Waste’s amendment certified a $125,000 increase in the Recycle Ohio Grant special revenue fund. This $125,000 was transferred to the Recycle Ohio Grant fund from the general fund.
Other Business:
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The Budget Commission voted to acknowledge $130,000 in Geauga Trumbull Solid Waste Supplemental Appropriations: the aforementioned $125,000 transfer to the Recycle Ohio Grant fund from the general fund and $5,000 in the general fund for advertising.
General Discussion
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Potential 2025 Tax Mitigation - The Budget Commissioners discussed what they should communicate to local government entities regarding potential continued mitigation of increased property taxes that were caused by the 2023 property revaluation. Mr. Walder said he sees no evidence of the State taking action on this matter in the immediate future, and Mr. Flaiz agreed that the Ohio Legislature was unlikely to do anything. Mr. Hitchcock said that neither the State Treasurer nor the State Auditor mentioned anything about this at the County Treasurer Association Meeting the previous week.
Mr. Walder recommended that the Budget Commissioners do the same thing they did last year by sending out a letter to Geauga bodies that collect property taxes asking them “... to consider their taxpayers and to mitigate whatever they can afford to mitigate.” Mr. Hitchcock stated that the Budget Commission may want to make another presentation on this to the Board of County Commissioners (BOCC) as they did in 2023 because he thought that it was helpful. Mr. Walder noted that the BOCC “set the tone” on property tax mitigation last year, and they have already reached out to him for advice about potential continued mitigation this year. He told the BOCC that advice would be forthcoming after the Budget Commission discussed the matter. Mr. Flaiz agreed and said that each entity will need to look at their own specific situation as far as whether or not mitigation is appropriate and if so how much they should mitigate.
Mr. Walder said that he is most concerned with Berkshire and West Geauga School Districts because they are both below the 20 mill floor, which caused the residents of those districts to experience a $6 million property tax increase. Reviewer Note: See explanation by Mr. Walder of the 20 mill floor here. Mr. Flaiz pointed out that Berkshire residents did not pass the district’s renewal permanent improvement (PI) levy in March. Mr. Walder said “They (the voters) mitigated it for the school. They said no to a renewal levy, basically neutralizing their inside millage component, but they still got a million and a half of floor adjustment.” Mr. Hitchcock hypothesized that “I think that trend (school levies failing) will continue for the foreseeable election future.”
Mr. Walder said that he was recently on a WKSU program discussing problems with the school levy system. He also noted that he will be giving testimony to the Ohio Senate later in the week regarding potential changes to how the 20 mill floor is calculated. He will propose adding funds from emergency and substitute levies, as well as inside millage dollars shifted to permanent improvement, to the 20 mill floor calculation. Observer Note: Please see the Public Comment section for more information on substitute levies. Mr. Walder also plans to advocate for creating a “quasi effective millage” equaling that of any income tax received by school districts and adding this to the 20 mill floor equation as well. He stated that these changes would have to be made by the Ohio Legislature to go into effect. Observer Note: At the Auditor’s Department Budget Hearing before the County Commissioners on May 21, Mr. Walder specified that the changes would be made to Ohio House Bill 920. He estimated that half of Ohio’s schools would be affected if these changes were implemented. Mr. Walder opined that “I think there’s no question that school funding is screwed up, but the solution is not to just tax people without their say.” He pointed out that voters are not informed that emergency levies do not count towards the 20 mill floor. Mr. Walder bemoaned “... the lack of transparency when you vote on these levies. You should know, is this district at the floor and is this (levy) counted (towards the 20 mill floor)? If the answer is no, then you should vote accordingly.”
Mr. Walder said that the Budget Commission will be evaluating whether or not Geauga school districts with emergency levy funding are actually in a state of emergency at the annual school budget hearings. He said if this is not the case “... we have a duty to put them in technical emergency (by reducing their emergency levy funding).” Mr. Flaiz said “I think that an emergency means you’re deficit spending.”
The discussion circled back to communication with local taxing bodies regarding property tax mitigation. The Budget Commissioners decided to send a letter to all of these entities similar to the one sent out last year. This letter will ask entities to consider providing taxpayers with property tax mitigation to the extent they are able while keeping in mind their own budget and financial needs. Mr. Walder said “I think it’s very important that we deliver the message to local governments that it’s their call. We’re simply asking.” He went on to say that the tone should be “... we’re just asking. If there’s any way you can do something, your taxpayers would really appreciate it. And not this, ‘we’re doing it, so you have to do it.’”
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The Budget Commission’s Role for Fire Departments - Mr. Hitchcock stated that he thought that fire departments that receive levy funding were under the purview of the Budget Commission, whether they are public or private, and asked the Prosecutor’s opinion on the matter. Mr. Flaiz said that his office had previously been involved in litigation with the private Munson Fire Department because the Trustees wanted to get financial information from them but the fire department felt that they were not subject to public records law. He said that his office won the case and the decision indicated that private fire companies are subject to public records law. Mr. Flaiz noted the Munson Fire Department tried and failed to get this decision overturned on appeal. He remarked on how strongly the Munson Fire Department fought: “I just wanted their payroll. I just wanted to know what they were paying everybody. They went crazy.” He later classified this as “... a vicious fight just to get their payroll records” and said it took a lot of time and effort on the part of his department.
Mr. Hitchcock opined that “If they (private fire companies) are taking tax money, it should become an open book.” Mr. Flaiz agreed with this sentiment, but he cautioned that “...we don’t regulate them directly, the private company. We regulate the townships.”
The Budget Commissioners and staff remarked that numerous Geauga fire departments are private, including Munson, Chardon, Burton, Newbury and Auburn. Mr. Flaiz said that about 12 years ago, the Bainbridge Fire Department was private and the fire company decided to terminate its contract with Bainbridge Township after a falling out. Bainbridge then got the Bainbridge Township Fire Department in place and asked the private fire company for its money back. Mr. Flaiz said that by law if a fire company breaks a contract, anything they have goes back to the taxpayers. He stated that the private fire company was “... hiding 300-some thousand dollars they didn’t disclose to the township. We found out about it. We had to file a lawsuit against them (because) they wouldn’t give us the money.” Mr. Flaiz said “...fire companies, they think, ‘we have a contract, we charge you for a service. It’s going to cost you $1 million a year to provide fire protection for the township.’ And they think if they only spend $800,000, they get to keep the $200,000. That’s not what the law says. The law says, ‘...that money’s always taxpayer money and if you don’t reinvest in the department, if you terminate, then it goes back (to the taxpayers).’”
Mr. Walder asked Mr. Hitchcock what he had in mind by bringing up this matter. Mr. Hitchcock said that “I think we need to start being as diligent with the fire departments that receive taxpayer dollars as we have been with all of the other municipalities or entities. We are an exemplary Budget Commission because of our passion for following up where the tax money goes. We aren’t very good about it with the fire departments.” Mr. Walder volunteered to put together a template for financial information that they would want from the fire departments and then, once they all agree on it, the Budget Commissioners can send the form out to the fire departments. Mr. Hitchcock said that the Budget Commission would ask for “very simple information” including assets like money and equipment. Mr. Flaiz said that they should ask how much they are spending on payroll as well. Mr. Walder added that they should ask about expenditures and cash balances. Mr. Flaiz said that they can do a public records request if the fire departments refuse to fill out the form. Mr. Walder said it may take a while to get the form out and therefore it may not be available until the next budget cycle.
Public Comment
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This observer requested copies of the revenue certifications from this meeting as well as a copy of the letter the Budget Commissioners plan to send to County entities regarding potential property tax mitigation. The certifications were received via email on May 21. As of publication, the letter has not been received yet by this observer. However, this is not unexpected because the Budget Commissioners stated it would take some time for the draft letter to be created and then circulated to all Budget Commissioners for their approval. They also said that it is possible the letter may need to be discussed again at the next Budget Commission meeting before being sent out.
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This observer also asked what a substitute levy is. Mr. Walder said substitute levies come into being as follows: “When you get done with your emergency, you can convert it (an emergency levy) to a substitute (levy).” Mr. Flaiz then questioned “But it still doesn’t count toward the floor?” When Mr. Walder confirmed that it does not, Mr. Flaiz said “That makes no sense.”
Mr. Gorton categorized the increase in expenses as “steep.” However, he noted that only 85-90%
of general fund appropriations are typically spent, and he is considering adding a line to the tax
budget for “estimated unused appropriations” to account for this. Mr. Gorton said he would use this line to add back about 10% of the appropriation amount in order to more accurately reflect the County’s cash balance. Mr. Gorton asked the Budget Commission’s opinion about this. Mr. Flaiz said that he thought it was a good idea. Mr. Leyde said that this line item may already exist in the software and he will investigate it.
There was a discussion about potentially changing budgeting software programs in the future to find something that might be easier to use and better meet the County’s needs, but nothing was decided. Mr. Walder said the current software has no long-term saving or long-term allocation option, so they cannot plan/save for foreseeable large future expenses, such as software replacements. He said having money being saved for specific future purposes would be preferable to having funds just sitting in the general fund without being earmarked. Mr. Walder encouraged Mr. Gorton to look into budgeting programs that might better suit the County.
The meeting was adjourned at 11:10 am.
Next Meeting: Regular Meeting on Monday, June 3, 2024 at 10:00 am in the Auditor’s Conference Room at 215 Main Street, Chardon, Ohio.
Observer: Sarah McGlone
Editor: Anne Ondrey
Reviewer: Gail Roussey
Submitted: 6/4/24
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