Columbus, Franklin County face tighter budgets in 2025 as federal COVID dollars dry up
The Columbus city budget next year will be tighter than it has been in over a decade, warns Nick Bankston, chair of the Columbus City Council Finance Committee.
Bankston told The Dispatch Wednesday before the council's first hearing on the 2025 general fund budget that this could mean less city funding for things like nonprofits serving residents and the city not filling as many staff vacancies.
For the first time since 2009, Mayor Andrew J. Ginther's proposed $1.23-billion budget for next year doesn't include any money for the city's rainy day fund or the 27th pay period fund (meant for when there is an extra pay period as happens about every 11 years).
Ginther's proposed spending plan also calls for using all $19.5 million in the city's basic services fund, which has previously been used to cover city functions when unexpected expenses arise throughout the year.
According to Bankston, this crunch is due to multiple factors: federal COVID pandemic relief dollars are going away, three of the city's major unions (including police and fire) negotiated new contracts this year with raises, costs for everything are up and income tax revenue (about 80% of the city's revenue) has not increased as much as it has in previous years.
These challenges are not unique to Columbus, Bankston said. He said he doesn't want to be alarmist but wants to be transparent about the tough decisions that lie ahead.
"This is not doom and gloom," Bankston said. "The city of Columbus is doing fine."
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The city will collect an estimated 2.3% more in income tax revenue in 2024 than it did last year. But that's not keeping pace with the growing city's rising costs as it has in past years, Bankston said. In 2023, tax revenue increased by 5.2% and in 2022, it went up by 4.4%.
During the pandemic, the city received a windfall of about $510 million in federal recovery dollars. The city used those dollars to substitute revenue, to support nonprofits and to create programs for youth and violence prevention.
For example, this year, the city gave $9.4 million in federal dollars to the Community Shelter Board, which operates the county's homeless shelters, on top of the $5.5 million allocated in the 2024 budget. Unless revenue outperforms estimates, Bankston said the shelter board will not receive as much in 2025.
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Even without adding to it, the city's rainy day fund will have an estimated $105 million at the end of 2025. The 27th pay period fund has $14.5 million and the next year with 27 pay periods is 2032. This would be the first year since the fund was established in 1994 that the city has not added to it.
The City Council will vote early next year on the 2025 budget. Bankston said his goal is to vote on the final budget in February.
Before then, the city could face even more budget headwinds if the Ohio Senate passes legislation to require cities to pay more into police pensions. A bill passed the Ohio House Wednesday.
Franklin County also returning to 'fiscal normalcy'
Franklin County is also being forced to tighten its belt a bit. The county commissioners are currently weighing county Administrator Kenneth N. Wilson's proposed $2.2-billion budget for the county.
Wilson told The Dispatch that the community will have to adjust to a return to fiscal normalcy now that the federal COVID dollars are gone. The county received about $430 million in federal pandemic funds. All federal COVID money must be appropriated by the end of this year, although it can be spent next year.
Unlike the city, the county didn't use COVID money to cover salaries or ongoing expenses. Wilson said the county tried to use the dollars on one-time capital improvement projects like donating $7 million to the Mid-Ohio Food Collective for more freezers. The commissioners stressed to nonprofits receiving COVID dollars these funds would not be available going forward, although some likely used the money for salaries.
"We tried to have as much impact with those dollars as we could because it was a once-in-a-generation infusion of money," Wilson said.
This article originally appeared on The Columbus Dispatch: Columbus, Franklin County face tighter budgets in 2025
