St. Louis has its arch. Seattle has its space needle. And Columbus, Ohio's capital city, could have a 311-foot-tall statue depicting name-sake Christopher Columbus and his voyage to the new world.
But the city already has a few Columbus statues. And the fiscally sensible city may have better uses for the $20 million to $25 million that city auditor Hugh Dorrian says would be needed to prepare and install the gift from Russia.
Dorrian hasn't heard anyone in city hall voicing support for the much bigger-than life bronze monument - which is just as well for the people who oversee Columbus' finances. They are watching every penny of city money to make sure it is spent wisely, particularly in light of new budget-related programs that allow the city to project financial needs and evaluate services.
In 1991, the city began projecting its revenues and expenditures over 10 years. As a result, the city got an early warning that it was facing budget deficits and was able to take action. For example, in fiscal 1994, which begins Jan. 1, a $34 million shortfall has been projected. In fiscal 1995, the deficit is expected to shrink to $10 million, according to Wyatt Kingseed, Columbus' finance director.
In between deficit projections, the city has balanced its budget and will continue to balance its budget, Kingseed said. Last month, Mayor Greg Lashutka proposed a balanced $341 million spending plan for the coming fiscal year.
Kingseed said the fiscal 1994 projected deficit was caused by the hiring of more police and fire personnel and an overly conservative estimate of revenues from the city's 2% income tax - its largest tax revenue source.
Columbus Gets Aggressive
The projected deficit has been eliminated partly through what Kingseed called "an aggressive stance" on labor matters. Negotiations with the firemen's and non-uniformed unions won cost and management concessions for the city.
"The management worked harder on negotiations perhaps than the city had hisyorically done," Kingseed said.
Lashutka's fiscal 1994 budget calls for general capital improvements to be moved out of the operating budget and into the capital budget, a higher income tax revenue estimate based on a stronger than anticipated 6.47% growth in income tax collections this year, and elimination of the administration of the city Department of Human Services.
The city is projecting to end its current fiscal year with a $7 million general fund balance and with $7.5 million in its rainy day fund.
In addition to the 10-year budget projections, the Lashutka Administration has instituted a program to set and evaluate goals for city services and programs. The city will begin its first full-year report in January, Kingseed said.
And a two-year budget may be in Columbus' future. Kinseed said a biennial budget process would give the city more time to conduct program evaluations and would force the city to make tough budget decisions instead of postponing them.
He pointed out that a move to a two-year budget cycle would require a change in both state law and in the city's charter.
Growth is Threefold
Meanwhile, the last recession has slowed but not stopped Columbus' growth. While other Rust Belt cities have suffered from dwindling populations, stagnant or ailing economies, and falling revenues, Columbus has registered growth in all three areas.
The 1990 U.S. Census shows that Columbus grew by 12% over the last 10 years to nearly 633,000 leap-frogging Cleveland, which lost 11.9% of its population, to become Ohio's biggest city.
The city is also expanding in land size in accordance with a policy of "judicious annexation," according to Patrick Grady, Columbus' economic development administrator. The number of square miles in the city has grown to 198 in 1992 from 184 in 1982.
"We want to balance continued growth with the ability of the community to service that growth," Grady said.
There has been job growth as well. While Columbus experienced "flat" job growth at the beginning of the decade, Grady said, the number of jobs grew anywhere from 7,000 to 10,000 a year over the last two years. The city and its environs have succeeded in attracting new business to expand a job base that has the state of Ohio and Ohio State University as the two biggest employers.
Grady said the city is working with the business community to maintain the manufacturing sector, which has shrunk over the years. Additionally, the city is selling itself as a trade and transportation hub. Last year, Columbus was the only North American city to be designated as an "infoport" for a United Nations pilot program using computer technology to encourage international trade for small business.
Revenues from ~Columbus' 2% income tax have steadily grown. The revenue source not only feeds the city's operational needs but also its debt service requirements.
"The income tax is really the life-blood of the general fund and it's done very well. Even in recessionary times it still had positive growth upwards to 5%," Kingseed said. "Even in the worst recessionary years we still had a good economy here in central Ohio."
Dorrian noted that 25% of the revenues are used every year to pay debt service on Columbus' approximately $1 billion of general obligation bonds.
He said that $763 million of the debt is voter-approved unlimited tax GOs and has almost a double layer of security. The first is the 25% share of the income tax, which the city has historically used to pay off the debt The second is the city's ability to impose a property tax to pay off the debt should "a calamity" hit income tax receipts, he said,
"I can't imagine finding stronger GO debt than Columbus has," Dorrian said.
The remaining $308 million of GO debt has a limited tax pledge and is payable from existing city revenues. The city also has $334 million of revenue bonds outstanding, according to Dorrian.
Columbus' GO debt has an AA-plus rating from Standard & Poor's Corp. and an Aa1 rating from Moody's Investors Service. Being on the cusp of a triple-A makes the city aspire to the highest rating. Dorrian said in light of standard & Poor's recent upgrade of Franklin County to AAA, Columbus is readying its pitch for a rating boost.
"Columbus makes up two-thirds of Franklin County," Dorrian said. "Early next year we'll make another pilgrimage to the agencies to make our case."
Rob Wimmel, an associate in tax-exempt fixed-income research at Kemper Securities Inc., said a rating upgrade is a possibility for Columbus given its "strong financials and conservative financial management.
"[Columbus] has had good growth in assessed valuation," Wimmel said He added that while the city's dependence on the income tax makes it vulnerable to economic cycles, Columbus was not affected greatly by the last recession.
Rating agency officials, however, seem comfortable with the ratings they have bestowed on the city.
Paul Devine, a vice president and assistant director of the Great Lakes region at Moody's, said that while the city has a strong economic base, its finances have become tighter and the rating agency has had to keep a closer eye on the credit.
Michael Forrester, an associate director at Standard & Poor's, pointed out that Franklin County has more revenue-raising flexibility than Columbus.
"The city is at its tax limit on property and income taxes," Forrester said. "It's dependent on economic activity to raise revenue."
Additionally, the city has more capital needs than the county, Forrester said.
Kingseed said the mayor has no interest in seeking all increase in the income tax rate. But it revenues don't continue to exceed estimates, then something along the lines of a fee for city services will probably be considered. A fee for refuse collection may be a candidate, he said.
Even before instituting a fee, the city will continue to look at ways to economize services and review options for privatization, Kingseed said.
The mayor's fiscal 1994 budget calls for the issuance of $260 million of GO bonds, although Kingseed said the city probably won't issue the total amount. About $183 million of the debt would be sewer and water bonds that voters authorized in 1991 as part of a $525 million GO bonding package.
Kingseed said voters will be asked next year to approve another $200 million to $250 million of unlimited tax GO bond authorization for general capital improvements. He said the authorization would cover projects from 1995 to 1998.