ALLIANCE – The city’s financial situation appears to be moving in a positive direction.
Andrew Grove, who served as a councilman at-large and chairman of Alliance City Council’s finance committee through 2021, estimated that Alliance ended the year with a carryover balance of roughly $3 million. This comes about four years after the state auditor elevated Alliance to fiscal watch.
More:Alliance’s general fund appears ‘stable’ as year nears end
The state auditor’s office placed Alliance in fiscal caution in January 2018 after the city saw low end-of-the-year balances in several municipal funds. Four months later, Alliance moved up to fiscal watch status — a higher level of concern — after the city failed to put forward a financial recovery plan within the allotted time frame.
The highest level of fiscal distress is fiscal emergency.
Mayor Alan Andreani developed a plan for financial recovery, which the city implemented in 2018. Grove, a Republican, said city officials have remained in touch with the state auditor’s office for the past few years, providing updates on Alliance’s progress.
“Prior to the mayor’s plan going into effect, the city for 10 years had been in deficit spending budget operations,” Grove said. “So going into the mayor’s plan, the city was already $250,000 in the red.”
According to a finance committee chairman’s report, Alliance finished 2018 with a carryover of $445,000, 2019 with $1.4 million and 2020 with $3.1 million. City Auditor Kevin Knowles said pandemic relief helped the city manage expenses last year.
“The biggest source of revenue for the city is income taxes, which was down considerably last year at 7%. But we received $1.2 million in CARES Act money that we used to offset payroll, so we lowered our expenses,” Knowles said.
Alliance also received a more than $1 million refund from the Ohio Bureau of Workers’ Compensation in 2020.
The city still has some American Rescue Plan funds to use but Knowles said that since pandemic relief is not a regular occurrence, it is not considered in the annual forecast.
Grove said one of the most important factors contributing to the city’s financial stability is the municipal income tax distribution percentage. The percentage of money allotted to different funds is adjusted annually, he said, and can affect the year-end carryover. This year, Alliance’s income tax allocation percentage was 79%, which was 12% lower than in previous years.
Alliance’s general fund revenue for 2021 is $11.4 million, according to a finance committee report from Grove. This number is about $113,000 lower than 2020 and about $898,000 lower than 2019. But the report states that lower revenue was expected this year because of the lower percentage of income tax allocation.
Grove said the state auditor’s office told city officials that Alliance needs a carryover balance of $1.2 million every year based on the city’s size and population in order to get out of fiscal watch status.
Knowles said it’s too early to determine whether the city will be ready to come out of fiscal watch in 2022. But the process would require City Council to pass an ordinance requesting removal, and Knowles would have to put together a forecast showing that the city is in stable financial condition.
“With COVID, there’s still a lot of uncertainties out there, even though things are looking up,” he said.
Reach Paige at 330-580-8577 or pmbennett@gannett.com, or on Twitter at @paigembenn.
