PORTAGE - The village is sinking in a sea of red ink and must make drastic cuts or dramatically increase revenue if it wants to stay afloat.
At a special meeting Monday, council was told Portage is expected to have a $196,411 deficit by the end of this year. If spending continues and revenues don't change, the deficit is expected to balloon to $448,796 by the end of 2013.
"The bottom line is this is a circumstance you cannot allow to happen," said Belinda Miller, chief project manager of the local government services division with the Ohio auditor.
The village has been in fiscal emergency with the state since April. Monday was the first time council and Mayor Mark Wolford saw exact figures and that almost every fund, including police, streets and parks, is spending more than it's taking in.
"Looking at the numbers, it's going to be tough. We've got some real problems here," Miller said. "I think you'll find some of this information surprising and the changes you'll have to make pretty dramatic."
She told council to stop any unnecessary spending immediately.
"Unless it's a critical expenditure you can't be spending the money."
Council must also come up with a financial recovery plan before Oct. 5. The next day, the plan will be presented to the financial planning and supervision commission. That group, which met earlier Monday, consists of Paul Marshall, of the office of budget and management; Jessica Ford, treasurer of state office; and local residents, Judith Amend, Ronald Amos and Lisa King, who were appointed by the governor.
Special meetings at 6:30 p.m. in the town hall were set for Sept. 15 and 28. Council also has regular meetings Sept. 8 and 21.
One possible cut is the police department. Miller said it is expected to operate at a $69,000 loss this year.
"I tried to cut back once with the police department and that was a nightmare," said Council President Jay Sockman. "I'll say it again. I'll be the bad guy. We need to get rid of the police department."
This summer council voted 3-2 to cut the police chief's hours from 40 to 20. When a full council next voted, it was 3-3 with Wolford casting the tiebreaking vote to keep the chief's hours at 40.
"This police department is just costing us too much money and we can't afford it," said Councilwoman Tamara Sharp. "There's nothing in here that surprises me."
Joe Amend, a former fire chief and zoning board member, reminded council that the police department used to bring in a great deal of money to the village. He said revenues paid for a fire truck and the town hall.
After the meeting, Wolford said he is still hoping to pour over the numbers and find a way to get the police department to break even or even bring in some money.
"The police department supported this town for a very long time and it would be a shame, the way we handled things, for us to lose it," he said. "I'm OK with it. I needed numbers. I needed numbers I could follow. É Now I've got to go home and look at these numbers and say this is what we've got to do to make this work."
Other cuts could be made in the phone contract, insurances, supplies and materials and training.
The streets fund is running $51,908 in the red this year and the parks fund - which receives no revenue - is $4,500 in debt.
The wastewater fund, which receives a constant stream of $137,900 in consumer rent annually, is in the black, but Miller said it was spending a little more money every year and would have to be addressed in the future.
Ways to increase revenue are asking voters for a property tax or increased income tax. Council already implemented a 1 percent income tax, which is allowable without a vote, earlier this year. It's expected to raise $60,000 annually.
Miller said 1 mill would raise about $6,000 in Portage so it would take about 12 mills to finance the police department.
"A property tax isn't going to fly," said Mike Stacklan, who's lived in the village 40 years.
Miller ran several scenarios for an additional income tax.
She said a .5 percent increase and keeping the police department would mean a $340,000 deficit by 2013. Without the police department, there would be a $90,000 debt in four years.
With a 1 percent income tax increase and keeping the police department, there would be a $231,000 deficit by 2013. The tax without the police department would get the village in the black by $20,000 by 2013.
Miller reminded council that not only did a five-year plan have to show the village out of debt but also on good pace for the future.
"You've got to weigh the services that you want with what you can pay for," she said.
Another source of revenue is annexing property into the village. Wolford said he's tried unsuccessfully to persuade one property owner to join the village, which would free up three businesses to come into Portage.
"It's not realistic to build into your projections at this point," Miller said.
Carl Crawford, who is running for council on the Nov. 3 ballot, asked what would happen if the village just went bankrupt.
Miller said if Portage couldn't function it would be dissolved and revert back to the township.
In April, Miller said most municipalities average three to four years under fiscal emergency and there are about 16 cities or villages in the state under that designation. Portage won't be charged for the state auditor's services until year three under fiscal emergency.
File photo. Belinda Miller (center) talks to the Portage Council about their financial woes. (Photo: Aaron Carpenter/Sentinel-Tribune)