City optimistic about fiscal outlook

Income tax collections up, property tax collections down.

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By Michael D. Pitman, Staff Writer Updated 3:28 PM Saturday, February 11, 2012

MIDDLETOWN — The financial outlook city officials have for Middletown is optimistic despite mixed results from two of the city’s largest revenue streams.

For the second straight year, the city’s income tax collections have increased, this time up 7.3 percent. But for the sixth straight year, property tax collections have fallen. Those collections took a 9.2 percent dive from 2010, which led to a tough budgeting year for the city.

Councilwoman Anita Scott Jones said taxes often swing back and forth, and while income tax collection is swinging in a positive direction she feels the property tax collection will soon swing that way.

“I just think it corresponds with the way the economy is right now,” she said. “You can forecast and budget but the reality is what actually comes in.”

According to the recently released 2011 financial report, the city received just under $4.07 million last year in property taxes, a near 30 percent drop since 2005 when the fund exceeded $5.7 million.

The city’s income tax is up to $17.42 million from two years ago when it was just over $16.1 million said city finance Director Russ Carolus.

The city’s 2011 budget planned for $29.8 million in general fund revenues, but it had to balance last year’s budget with about $800,000 of the city’s cash reserves. City officials hope that the cuts made for the 2012 budget will prevent the need to balance the budget with the cash reserves.

“You don’t want to make significant cuts, but if you do you hope they’re going to be temporary,” Mayor Larry Mulligan said.

The 2012 budgeting process started last spring, said City Manager Judy Gilleland because they knew significant cuts would come because of a reduction in state funding.

“I have renewed hope in 2012. I’m glad 2011 is behind us. Fiscally, 2011 was a pretty tough year because of the decisions we had to make on reductions,” she said. “We have met our challenges, our economy is stable and we have seen many bright spots popping up.”

City officials said tough choices were made in 2011, mostly to make budgeting for 2013 easier to absorb the remainder of the state’s reduction in funding.

“The city has a number of revenue streams and when a substantial number of those revenues are cut, we have to find other areas,” said Carolus.

“We have to balance our budget.”