No need to cut spending if we use 2010 monies for 2009

Toledo City Council has an item on the agenda for next Tuesday committing to spend 2010 revenue to cover the 2009 deficit - if voters approve the change in the 3/4% payroll income tax allocation.

Here is the resolution:

RES. 456-09

Committing to the electors of the City of Toledo at the Primary Election to be held on September 15, 2009 voting on the approval of the change of the allocation of the three-quarters percent (3/4%) income tax for the period commencing upon passage by the electorate and ending December 31, 2012, that Toledo City Council will utilize newly available funds in the General Fund in 2010 to cover the deficit from 2009 operations.

WHEREAS, on January 6, 2009 City Council adopted Resolution No. 29-09, which submits to the electors of the City of Toledo at a Primary Election to be held on September 15, 2009 the question of the approval of the passage of Ordinance No. 28-09, providing for a change of the allocation of the three-quarters percent (3/4%) tax on income for the remainder of 2009 and ending December 31, 2012; and

WHEREAS, the Council of the City of Toledo desires to modify the allocation of the ¾% income tax for the remainder of 2009 to one-half (1/2) for Police, Fire, and other Safety Department responsibilities and one-half (1/2) for the General Fund, and for the period of 2010 - 2012 to one-half (1/2) for Police, Fire, and other Safety Department responsibilities, one-third (1/3) for the General Fund and one-sixth (1/6) for the Capital Improvements Fund; and

WHEREAS, the current projected General Fund deficit for 2009 is $8.9M and the change of the allocation would allow for $3.9M to be used towards this deficit in 2009 as committed by Res. 118-09 adopted on March 31, 2009; and

WHEREAS, a $140.7M income tax projection for 2010 would allow for $7.8M to be utilized within the General Fund, covering the remaining 2009 deficit now estimated at $5M; and

WHEREAS, City Council unanimously adopted Res. 399-09 on July 7, 2009 strongly urging the electors to approve the Safety First Plan, Issue 1 on the September 15, 2009 Primary Election ballot; NOW, THEREFORE,

Be it resolved by the Council of the City of Toledo:

SECTION 1. That Toledo City Council does hereby commit to the electors of the City of Toledo at a Primary Election to be held on September 15, 2009 voting on the approval of the change of the allocation of the three-quarters percent (3/4%) income tax for the period commencing upon passage by the electorate and ending December 31, 2012, that Toledo City Council will utilize newly available funds in the General Fund in 2010 to cover the deficit from 2009 operations.

SECTION 2. That the Members of Toledo City Council commit to utilizing newly available funds in the General Fund in 2010 to cover the deficit from 2009 operations pending the September 15, 2009 vote on the change of the allocation of the three-quarters percent (3/4%) income tax.

SECTION 3. That this Resolution shall take effect and be in force from and after the earliest period allowed by law.

This is insane! And probably qualifies for 'stuck on stupid' designation, as well.

Just like with the coupons in exchange for a trash tax increase, they're trying to bribe us into passing Issue 1 so they can keep moving around monies because they can't stop spending. Only this time, the 'bribe' is a promise to use future funds to cover overspending now.

Which means, in case you missed it, that next year we won't have the necessary funds to cover 2010 expenses, especially when many of the costs 'saved' this year will be back in place as of January. Remember the PERS pickup and bonus payments for police and fire union members? When those provisions go into effect in 2010, we'll be right back where we started with unsustainable contracts and costs higher than we can afford.

But don't worry, we'll just face those budget deficits then. And if we use 2010 money to pay for 2009, we can say we balanced the budget without raising taxes - during an election year!!! Yippee!!!
(sarcasm off)

Of course, this doesn't address the problems inherent in Issue 1 - that removing money from the capital improvements fund to meet yearly expenses means less money for such long-term items as road repair. But maybe you won't notice if all council talks about is this 'commitment.'

And then there is that little caveat in the resolution:

"...$140.7M income tax projection for 2010 would allow for $7.8M to be utilized within the General Fund, covering the remaining 2009 deficit now estimated at $5M"

With the current decline in population and the high unemployment numbers, will the city be able to realize $140.7 million in income tax collections? They're having trouble meeting this year's projection - what happens if things in Toledo get worse? (It's been known to happen...)

Just like cartoon character Wimpy, Popeye the Sailor Man's mooching friend, says, "I'd gladly pay you Tuesday for a hamburger today."

Only this isn't funny.

UPDATE: A friend who is a city auditor in Ohio provided this insight on the issue on my Facebook page:

"...I believe the only way this can be done is through the issuance of a tax anticipation note (TAN). If this is the case, not only will the TAN have to be paid back next year but it will have an interest premium attached. If they borrow $5 million (which they will have to do since I assume the tax won't be collected until next year) at 5% that amounts to $250,000."

If that's the case, more questions need to be answered before council votes on this on Tuesday!