Title
A RESOLUTION AUTHORIZING THE CITY MANAGER TO ENTER INTO A MEMORANDUM OF UNDERSTANDING WITH THE HUDSON CITY SCHOOL DISTRICT REGARDING INSIDE MILLAGE
Brief Description: Inside millage up to 10 mills is available without voter approval for local use. The City currently is allotted 3.57 mills, of which 3.1 mills flows to the general fund, and the Hudson City Schools are allotted 4.23 mills. This proposal would shift 2 mills from the City’s Allocation to the school district.
Body
Legislative History
None
Purpose & Explanation
The proposal would shift 2 mills of inside millage from the City to the School District. An MOU would be used as the vehicle, with an option to terminate with one-year notice.
The potential effect on the budget of the city was summarized as follows, by the City Administration:
The City’s General Fund currently has 3.1 mills of inside millage that will generate an estimated $3,675,402 in 2023. The County’s re-appraisal of the City is estimated to increase property tax values 27% for 2024. As a conservative measure, we assumed a 20% increase to account for revised estimates from appraisal appeals and delinquencies. As you know, property taxes on inside millage increase as valuations increase.
Assuming a 20% increase in appraised value, the following is the estimated annual property tax revenue the City would forego:
One mill = $1,422,736 ($3,675,402 / 3.1 mils + 20%)
Two mills = $2,845,472 ($3,675,402 / 3.1 mils + 20% x 2)
Attached is the current draft of the General Fund Five Year Plan. We adjusted the plan to remove 2 mills from the General Fund property tax revenue line item. You’ll see the General Fund would have a negative balance of $1,172,700 by the end of 2028.
Also attached is the Five-Year Plan draft if we reduced the inside millage and eliminated the funding set aside for future unfunded projects (as highlighted in yellow). In this scenario, we would be below our 40% carryover policy beginning in 2025.
Legal concerns include whether it is permissible for the City to donate funds directly to the schools. For example, Revised Coded section 721.01 prohibits the donation of real property to a school district. City of Cleveland v. Public Library Bd. of City School Dist. of Cleveland, 94 Ohio St. 311, 114 N. E. 247 (1916). R.C. section 717.01 sets out the specific powers of a municipal corporation and does not address donations.
Legal Authority for Proposed Legislation
Pursuant to Charter Section 6.04, Contracts & Purchasing:
Competitively bid and advertised for two consecutive weeks; bid tab attached: [Yes/No/NA])
Joint or Cooperative Purchase Program
Professional Services
Other [provide explanation]
Fiscal Impact
Currently Budgeted (Account #, $)
X Supplemental Appropriation Required (Account #, $)
Appropriation Not Required
Does this legislation require use of an emergency clause?
Yes [if so, explain why]
X No
Recommendation
Suggested Action
The City Administration recommends City Council does not undertake this MOU due to the potential adverse impact on future City of Hudson Budgets
Submitted by,
Thomas J. Sheridan, City Manager
Jeffrey Knoblauch, Assistant City Manager, Finance Director
John Kolesar, City Solicitor