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Tuesday, January 24, 2012

COVINGTON LAYS OUT PRECARIOUS FINANCIAL OUTLOOK, PREPARES FOR FUTURE

by Michael Monks 
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It was a return to last summer's bleak discussions of Covington's finances at City Hall Tuesday night. A report by the audit committee during the City Commission meeting laid out a troubling message: Covington could run out of cash in the early weeks of the new fiscal year that will begin in July. Worse still, the stark projections have yet to factor in the economic impact of the departures of Omnicare and The Nielsen Company from RiverCenter Boulevard, an expected $1 million blow to the budget. "Come June 30, 2012, we may have athree or four hundred thousand dollar general fund balance and we'll have a million dollars less in revenue on July 1 and our health care and pension costs are going up," said Bob Due, Covington's finance director.
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The audit report demonstrated that forty-nine percent of the city's revenue comes from payroll taxes and business license fees. Seventy-three percent of the city's expenses is salary and benefits for employees. 
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"It's important to note that there is an emerging deficit and that's something we've talked about over the past three months and something we will be commenting on in the coming weeks to reverse that trend because that is not sustainable," said Mayor Chuck Scheper who will begin to lay out some of this plans during a Thursday speech to the Covington Business Council. The mayor's full State of the City address will further explore Scheper's plans next Tuesday night at the Madison at 6:00PM in a free event open to the public.
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"We're getting pretty lean and the challenges that we face, we need to address them head-on," Scheper said. "This doesn't reflect the loss of two major employers yet which are still forthcoming. Our infrastructure needs are over thirty million dollars so budgeting two to three million is not letting us make the progress that we need to make."
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Commissioner Steve Frank credited last year's budget cuts with saving the City from an even worse outlook by the audit committee. "Had cuts not occurred, our general fund decrease would be even greater and we would have even less cash on hand," Frank said. The four commissioners each stated that they are on board with Scheper's plans that will be partially unveiled Thursday and then further next Tuesday. 
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"What the mayor is about to release is not just for the five of us to implement," Commissioner Shawn Masters said. "We have to be reaching out to the business community too. This is first time that all five of us up here have agreed with something and we're all on the same page. You see the situation that we're in. We'll be making decisions that won't be popular."
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"It's been a challenging time but one thing I can tell you is that we have worked together well as a team," Scheper said. We are facing the reality of issues head-on and coming up with strategies and plans and actions that will truly change the direction of the City going forward. It's an important time for the future of this city."

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