A total $65 million is left over from the city of Cincinnati's last budget, which ended June 30.
A City Council committee voted Monday to put some of the money into various savings accounts, and approve about $26 million in one-time spending; $14.9 million is left for Council to decide how to spend over the next few weeks.
City Finance Director Karen Alder says the surplus is thanks to expenditures coming in below estimates, and revenue coming in higher than projections.
"This included an increase of 5% over-estimate on income tax. Investments were more than three times what the estimate was," Alder told the Budget and Finance Committee. "And also, admissions taxes were 24% over estimate at $2.2 million. Admissions taxes were largely driven by larger attendance at the Reds games, as well as some large attendance of some concerts that were held at Paycor Stadium."
About a quarter of the surplus automatically goes into several reserve accounts, following a financial stabilization policy set by Council over the past several years.
- General Fund carryover balance (1.5% of operating revenue)
- General Fund contingency account (2.3% of operating revenue)
- Economic Downturn Reserve (5% of operating revenue)
- Working Capital Reserve (8.2% of operating revenue)
This year that totals about $17.4 million; added to the amount already in reserve, the city now has 17% of the annual General Fund in various reserve accounts, exceeding the 16.7% recommended by the Government Finance Officers Association (GFOA).
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After the reserve accounts, surplus funds go into a "waterfall" of pre-established funds dedicated for certain things: $5 million for the Affordable Housing Trust Fund; $2 million for the city's unfunded pension liability; and $500,000 for an Operating Budget Contingencies Account.
Council also approved $21.7 million in one-time spending recommended by City Manager Sheryl Long and $4 million in one-time spending recommended by Mayor Aftab Pureval.
City Manager's recommendations:
- $6 million for Cincinnati Fire Department (CFD) retroactive pay and one-time lump sum payments (covering the city's recently approved bargaining agreement that dates back to Dec. 2023)
- $1.6 million for CFD wage increases
- $3.6 million for Cincinnati Police Department (CPD) retroactive pay (covering the city's recently approved bargaining agreement that dates back to April 2024)
- $4.2 million for CPD wage increases
- $2 million for IRS tax rule compliance (funds will cover benefits received by retirees that exceeded the maximum amount allowable from the Cincinnati Retirement System)
- $990,000 for CFD to replace 22 cardiac monitors that will be out of warranty by the end of 2024
- $500,000 for CPD to replace outdated mobile data computers in police vehicles (added to $500,000 in the FY 2025 budget for the same project)
- $250,000 for the City Manager's Office to provide additional public safety measures Downtown and Uptown
- $2.45 million for funds appropriated in FY 2024 but could not be completed by the end of the fiscal year
- $100,000 for the Department of Transportation to conduct a site assessment for a permanent customs facility at Lunken Airport
Mayor's recommendations:
- $580,000 for Cincinnati Parks Department Sinton Facility improvements
- $500,000 for speed cushions on Colerain Ave.
- $320,000 for City Hall renovations
- $500,000 for Cincinnati Police Department "ending service weapon buy-back provisions"
- $250,000 for Keep Cincinnati Beautiful building acquisition
- $1.4 million for Talbert House crisis center facility
The mayor's proposal also includes $100,000 for 3CDC North Over-the-Rhine Clean & Safe Ambassador Program, taken from the Reserve for Operating Budget Contingencies Account (leaving $400,000 in that account).
Mayor Pureval will present more detail on his proposal during Wednesday's regular City Council meeting, according to a spokesperson.
Learn more about this year's carryover budget:
- Link to Monday's presentation slides
- Link to ordinance passed in committee on Oct. 7
- Link to report from the City Manager's Office
Calculating how much to save
The city's bond rating — essentially its credit score — is heavily affected by how much money is set aside for potential emergencies. The city uses the GFOA recommendation of 16.7% of General Fund revenue in the most recent fiscal year. The city reached that benchmark for the first time in 2022, supported by tens of millions of dollars in federal stimulus from the American Rescue Plan Act.
The question becomes: Should the city include ARPA when calculating 16.7% of revenue? Including the extra income means saving more money, but most of the stimulus funding has been spent on one-time projects, which means the city wouldn't actually need to replace that revenue.
City officials have approached this question inconsistently over the past three years. ARPA was included in the calculation in 2022, reaching about $90 million in reserves (16.7% of prior-year revenue). In 2023, the city did not include ARPA and wound up with about $85 million in reserves (17.51% of prior-year revenue). In 2024, the city is once again including ARPA and has reached $95 million in reserves (17% of prior-year revenue).
Why the change? Last year, the city announced a carryover budget that was mistakenly $11 million over what was actually available, due to an error in an automated report. When the error was discovered, city officials decided to make up the difference by removing the ARPA money from the revenue total, decreasing how much should to be added to reserve accounts.
Either way is correct, but the change makes it a bit complicated to compare year to year.
If the city included ARPA revenue for fiscal year 2023, the reserve would reach only 14.9%, below the target threshold (but notably above the level reached in the years prior to 2022). Similarly, if ARPA revenue was not counted for 2024, the reserve percentage would jump from 17% to 17.87%.
