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City of Elyria still asking for tax hike after increased spending and unexpected windfall

The city of Elyria (pronounced eh-LEER-ee-ah for all you non-Northeast Ohioans) is located in my home county of Lorain. It is home to some major employers such as Invacare Corporation, which is headquartered there. Elyria has been the recipient of some good news lately. They have a load of cash coming to them.


ELYRIA — City officials will receive a multi-million dollar check in the coming days as it has learned it is the recipient of the largest unclaimed fund in state history.

Mayor Holly Brinda confirmed Friday the city will receive more than $3.4 million through the state Department of Commerce’s Unclaimed Funds Department. The money has been owed to the city for more than 10 years from life insurance policies the city purchased through Anthem during the time of former Mayor Michael Keys.

Brinda said apparently when the Anthem converted from a mutual insurance company in 2001 to a stock insurance company eligible policy holders — including Elyria – received a fixed number of shares in the new company. However, cities cannot buy or own stock so the cash value was supposed to be forwarded to the city.

Elyria didn’t find its mismanaged money. The state discovered it and contacted the city. Mayor Brinda is excited, but worried that this may hurt the chances of renewing a “temporary” income tax hike at the ballot box. (Note to Mayor Brinda, its not a temporary tax hike if you keep trying to renew it.) From a letter from her office:

I am writing to share with you some very important information regarding the status of City of Elyria finances. As you may know, we are forced to make $1.7 million in reductions in the 2013 budget as a result of the repeal of the Estate Tax and a decline in the Local Government Fund through the State of Ohio.

After many conversations and completing an application process I was informed last Thursday that the City of Elyria has $3,410,805.65 in unclaimed funds that will be forwarded to the City on January 28, 2013. Obviously, this is good news. However, we have to remember this is a one-time windfall of funds that will not be available in future budget cycles. The responsible thing to do is use one-time revenues to support one-time expenditure items such as, but not limited to, retiring debt, replacing equipment, making capital improvements, or short-term projects under a twelve-month duration.

Knowing that we will be receiving these funds, I have asked City Council to consider adopting a One-Time Revenue Policy to help frame the discussion about how to best use these funds. I am also very concerned about the potential negative impact this news may have on our ability to pass our expiring income tax in November of this year. While nearly $3.5 million sounds like a lot of money, it only represents a very small percentage of our overall General Fund budget. The receipt of these funds does not eliminate our need for the renewal income tax and it also does not eliminate our need to make reductions in this year’s budget. The income tax renewal will generate $30 million over five years and is critical to the basic operation of the city. Although called “temporary”, these funds have become a required, permanent funding source.

The mayor complains about a reduction in the amount that Ohio taxpayers have to pay to support her city, but what she fails to mention is that she increased spending by almost 5% in 2012. Also from the Chronicle-Telegram:

The 2012 appropriations for the general fund, which is the main pot of revenue city officials control, is budgeted within $70,000 of the city auditor’s estimated $30.28 million in tax revenue for the year.

That figure is roughly $1.38 million more than what was spent in 2011, which was roughly $28.82 million.

So, Elyria has increased spending and received a large influx of unexpected cash, but still wants to make a once-promised “temporary” tax increase permanent. All the while, complaining that state taxpayers should be footing the bill for growing their city government.

What DOES Mayor Brinda want to spend the unclaimed funds on? Investing to make government more efficient? Returning it to the taxpayers? No. She wants to buy new stuff, of course! I mean, why spend it wisely since we’re counting on keeping that temporary income tax increase, right?

I guess I shouldn’t expect any different from a city whose citizens voted for Obama over Romney by a 2-1 margin. You deserve the government you vote for, Elyria.

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Third Base Politics is an Ohio-centric conservative blog that has been featured at Hot Air, National Review, Washington Post, Los Angeles Times, Pittsburgh Tribune-Review, and others.


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