By DENISE GRANT
Removal of tax collection duties from the Findlay Auditor’s Office, a decision made by city council in the 1970s during a political uproar, is complicating the city’s financial management now, said city Auditor Jim Staschiak.
Staschiak’s frustration with the city’s ability to make financial predictions was center stage this week as he notified council of his intention to officially “amend” the city’s certificate of resources, a move that forces council to de-appropriate funds already earmarked to spend in this year’s budget.
The certificate was filed by his office with the Hancock County Auditor on Wednesday. It is the city’s official declaration of anticipated revenue, and the one the state will use to monitor its spending. By state law, Ohio’s municipalities are not permitted operate on budgets exceeding anticipated revenues.
City income tax receipts are now being projected at $23,945,000. That’s a drop of about $5.3 million compare to projections made in December, when council was reviewing this year’s budget. The income tax receipts are also about $1.7 million more than projections made by the city’s Tax Administration Office earlier this year.
At Tuesday’s council meeting, Staschiak said his projections are based on the best information available to him. Staschiak has repeatedly pressed for more access to tax information, but has been denied access to the records by the tax administrator, citing confidentiality.
In February, before the onset of the COVID-19 pandemic, Andrew Thomas, the city’s tax administrator, was already projecting a 50 percent drop in business tax collections, compared to the $4.4 million collected in 2019.
At Tuesday’s council meeting, Mayor Christina Muryn said tax collections are now down only about 11 percent when compared to last year.
Staschiak said the wild fluctuations in tax projections are concerning, and he has no way to gauge the accuracy of the information he is receiving from Thomas.
“I’d like to see the data and the tracking,” said Staschiak. “So far, there has been no sharing of critical data specific to his projections. What numbers is he using to make those projects?”
Thomas has said that business taxes are, by nature, volatile
As for the confidentiality issue, Staschiak said his office is bound by the same privacy restrictions as the tax administrator.
He also said state law grants him the right to see the tax collection numbers to perform his duties as auditor, like amending the city’s certificate of revenue.
Staschiak also wants other data, like specific numbers on business tax collections based on “SIC Codes” or Standard Industrial Classifications, which break business tax collections down by sector, like industrial, retail, car sales, etc. He said the classifications would be extremely helpful as city officials try to understand the impact of the pandemic on tax collections.
“The tax board agreed to initiate those codes five years ago, and I’m still being told that the data is not available,” he said.
On Thursday, Muryn said the difference in projections is just a matter of timing.
“The tax administrator released his last projection earlier this year to both myself and the auditor. The tax administrator’s projection was a worst-case scenario. The tax administrator’s projections were also prior to many of the government programs that have since been implemented,” said Muryn. “After reviewing the tax administrator’s projection, the auditor determined he wanted to wait to release a formal projection, which is perfectly appropriate.”
Muryn said Staschiak is being given information.
“If the auditor is not receiving information he needs to do his job, that is news to me,” she said. “I have been very intentional about ensuring that if the auditor requests something, it is shared with him.”
She is also glad Staschiak’s projections are more favorable.
“As an administration, we will continue to manage our finances appropriately to maintain our strong and stable finances through this uncertain time,” Muryn said.
The tax administrator is appointed by the mayor and is considered part of the administration. Thomas, the long-time tax administrator, was appointed prior to Muryn’s tenure as mayor.
Findlay Council voted in 1979 to create the office of tax administrator as an appointee of the mayor, and to remove the duties of tax collecting from the auditor’s office.
Council’s decision at that time came at the end of a tumultuous battle between then-Mayor John Sausser, a Democrat, and then-Auditor Harold M. Smith, a Republican.
In 1975, Sausser, with the help of Findlay police, raided Smith’s office and seized his tax files. He accused the auditor of failing to enforce the collection of city income taxes, to set up proper bookkeeping and to issue vouchers for expenditures, and demanded that Smith be removed from office.
Smith was later exonerated of the charges by an unanimous decision of city council. However, council also voted to create the position of tax administrator in an effort to improve oversight of city tax collections.
The story is detailed in a publication of the Hancock County Historical Museum Foundation titled “Our People, Our Story: A History of Findlay, 1950 to 2010,” which was published in 2011. The account is based on the reporting of the events by both The Republican Courier, and later, The Courier.
Staschiak said independent audits of city finances have noted that the arrangement is both unusual and inefficient, and should be corrected. He said Findlay is most likely the only municipality in the State of Ohio to operate this way.
Based on the amended certificate filed Wednesday, city officials must now reduce planned general fund expenditures by about $4.2 million and capital spending by about $1 million for the year. Council voted this week to de-appropriate about $4 million in city income tax spending, and an additional $202,100 was cut from Findlay Airport’s operations budget.
To abide by state law, council voted 10-0 to waive its three-reading rule on Tuesday, and rushed through the legislation as an emergency. The emergency clause means the de-appropriations are immediate, however; there is still no solid accounting by council of where the cuts will be made.
Based on Tuesday’s discussion, de-appropriations will likely be a combination of recommendations from both council and city administrators.
Earlier this month, Muryn said that city departments plan to not spend about $2 million in appropriations, but with little detail.
About $1.3 million in projects has already been trimmed from the city’s capital spending plan this year. Cut from the capital budget were plans to purchase new equipment and vehicles, make other parking lot repairs and install new streetlights.
On Tuesday, Councilman Grant Russel, R-at-large, questioned the need to file the amended certificate with Hancock County Auditor. By law, Staschiak said any overspending must be reported.
In all, Findlay’s total revenue was expected to total about $31 million this year, with council adopting a $30 million operating budget in January.
Council also adopted a $50 million capital improvement plan earlier this year. The capital budget includes money for several projects that were “carried forward” from last year. A majority of the capital money comes from grants, and state and federal dollars earmarked for specific projects. Last year, the capital budget totaled about $33.9 million.
This year, the city was expected to contribute about $4.7 million to capital improvements, and $2.7 million in city funds earmarked for last year’s projects. Council has also been asked to consider earmarking an additional $1.25 million for improvements.