XENIA — Ohio Auditor of State Dave Yost marked four areas of concern in his recently released Financial Health Indicators report for Xenia.
The report — which is a tool to help cities and counties better assess their financial health and make informed budgetary decisions to avoid potential future fiscal stress — uses data from a rolling four-year period and generates up to 17 financial indicators, each analyzing a significant piece of financial information. Depending on the data, each condition is designated as either having a “critical outlook,” “cautionary outlook” or “positive outlook.”
Xenia received a positive outlook in 12 of 16 indicators based on data collected from 2012-2015, while two were critical and two were cautionary. The four potentially trouble spots had to do with cash flow issues during that time period and did not surprise city officials, who had warned of potential cash flow shortages throughout the last couple years. The reduction of state funding and the elimination of the estate tax, which began in 2014, took approximately $1 million from the city during that reporting period. That, and a somewhat-unexpected expense of $1 million to clean up the former Hooven & Allison property affected the results, according to Finance Director Mark Bazelak.
“It kind of reflects what we’ve been saying,” he said of the report. “We were aware of some of the fiscal stresses and we were going to take some steps to remedy that.”
The critical indicators were for a drop in unrestricted assets of more than 20 percent and a ratio of general revenues to net expenses of less than 100 percent. The cautionary outlooks revolve around unrestricted net assets and the unassigned fund balance of the general budget, both of which had a decline between the current year and prior year by more than 1 percent but still has a positive balance.
“Not the best period of time for us to take a look at this,” Bazelak said, pointing to the reduction of state funding. “(And) we didn’t see an increase in our income tax collections.”
However as the middle of 2016 rolled around, Bazelak began to paint a brighter picture of the city’s financial future, thanks to a 9.5 percent increase in income tax collections — due to House Bill 5 changing due dates, residential growth and a better economy. The city was considering a levy on the fall 2016 ballot, but opted not to because key operating funds had a positive cash flow of more than $800,000
“We are cautiously optimistic,” he said. “We should look much better … once the 2016 numbers are in.”
Contact Scott Halasz at 937-502-4507.