By DENISE GRANT
In his mid-year budget review for 2019, Findlay Auditor Jim Staschiak tempers news of the city’s solid finances with a warning about the threat of a recession.
Staschiak gave the budget review at an informal council meeting this week. The review is part of the city’s yearly budget practice.
The report is available for public review on the city’s website: www.findlayohio.com.
In the report, Staschiak said the “single most reliable recession indicator of the past 50 years has started blaring.”
“If you believe in the signals coming out of the bond market, it might be time to start counting down … the U.S. Treasury yield curve has been inverted for a full quarter,” he said.
The curve compares the yields of short-term treasury bills with long-term treasury notes and bonds. The curve can be normal, flat or inverted. An inverted curve indicates little investor confidence in the economy, with an emphasis on short-term investments. The yield curve inverted before the 2001 and 2008 recessions.
There are other signs. Staschiak said the Federal Reserve, which had wanted to continue interest rate hikes through 2019, just reversed course and lowered them.
Staschiak also said Ohio has been rated one of the worst states in the nation for pension funding and unemployment compensation insurance funding, and there is a concern that the state could transfer its pension liabilities to local governments.
He also said Gov. Mike DeWine’s proposed budget would grow government spending as much as Ohio law allows.
But Findlay’s finances to date are solid.
So far, city income tax collections are up for the year, with Findlay collecting about $10.9 million between January and June. In 2018, collections during the first half of the year totaled $10.3 million.
Employment in Hancock County is stable, according to the Ohio Department of Jobs and Family Services. A total of 40,100 individuals were employed in Hancock County in June 2019, compared with 39,900 in June 2018.
While new and growing local companies continue to be a positive for Findlay and the region, Staschiak said economic development has yet to top the “peaks of 1990s.”
With proper planning, Staschiak said Findlay’s city government could weather an economic downturn.
In the report, Staschiak said the city has several “significant advantages,” including:
• Findlay owns its own water, sewage and storm water systems with minimal debt, which should remain a benefit in the community for years to come.
• The city owns its own parking enforcement and parking lots, but should consider a strategic plan to generate funds for specific improvements in parking.
• Findlay is not in “the business” of emergency medical service, trash or golf courses, all positives, according to Staschiak.
• Findlay typically pays cash for capital improvements.
Finally, he said City Council has a standing Strategic Planning Committee, with an opportunity to create a citywide, long-term view of the city’s direction and how to best cope with a recession.
Staschiak said promoting successful flood mitigation, preserving financial stability, maintaining excellent infrastructure and pursuing “best in class” economic development are all areas the committee could discuss.
“It’s time to consider increasing the minimum reserve balance legislation,” he said.
Staschiak is proposing a three-month reserve of the city’s general fund or 25 percent of operating expenses, which equals about $7.5 million. Council’s rules now require a reserve of two months worth of operating expenses, or about $5 million.