Friday, March 12, 1999
Falmouth rejects plan to fix budget
BY SUSAN VELA
The Cincinnati Enquirer
FALMOUTH — City council members still recovering from the March 1997 flood of the Licking River have rejected recommendations in a report that was supposed to place Falmouth on higher financial ground.
The report suggested, for example, that city council ask Pendleton County Fiscal Court for more money, annex property to the south, increase fees for fire runs into the county and pay back $145,000 to a utility fund that council has been borrowing from to pay for daily operating expenses.
Rejection of the recommendations seems to put council closer to seeking increased taxes or else exacerbating the city's budget woes.
“We're going to have to do something,” said Councilman Don Cross, who headed a three-member budget committee that released the report intended to help the city avoid a 1 percent payroll tax. “If we can't reduce our expenditures, we'll have to get more money from someplace.”
The seven-member council has five new members, including Mayor Jim Hammond. But they seem to be following the lead of the old council, which acknowledged that the city of about 2,400 had budget problems but could not agree on how to solve them.
At a meeting Tuesday, council members discussed the budget report before voting against it, 4-3. Members of the budget committee — Mr. Cross, Janet Fields and Gene Flaugher — supported it. Virgiline Moore, Clay Clifford and Mary Ann Shields voted against it.
Mayor Hammond split the tie by voting against it. He has refused to comment on his vote.
In December, council members voted 3-3 on a proposal to implement a 1 percent payroll tax, which could generate $100,000 a year for the city. Former Mayor Max Goldberg was not there to break the tie.
Former City Manager Steven Hasson, who left earlier this year because of the city's inability to continue his salary, had proposed the tax. He said it was needed to make up for property taxes lost to the flood.
Falmouth is the only fourth-class city in Northern Kentucky to not levy a payroll or business tax, and Mr. Hasson said either the tax or $100,000 in budget cuts were needed. The city is operating on a 1998/1999 spending plan of about $554,700.
After rejecting the budget report Tuesday, city council members went on to agree that the city police force will drop to eight police officers — one of the several recommendations in the report. They will not replace an officer who has left and one who is intending to leave, which should save the city about $50,000 a year.
Members of the budget committee, which includes incumbent Mr. Flaugher, say that's not enough.
Mr. Flaugher has said that implementing the committee's budget report would've made
the city operations more professional and businesslike. He takes exception to council members' seeming reluctance about paying back $145,000 to the city's utility fund.
He said that the fund was established for municipal water, garbage, sewer and electricity expenses but that, over the past five years, council members have been using the fund to cover shortages in the general operating fund. The budget report labeled the borrowing illegal and said the money should be repaid over the next five years.
However, the city's new legal counsel, Skip Watson, has said he'd have to investigate further before deciding whether the utility fund actually has to be replenished.
Mr. Watson acknowledged that, in general, the utility fund is not supposed to subsidize the general fund. But he said some communities do so in the form of official transfers from one fund to the other.
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