Mount Vernon’s Debt Reduction Paves Way for Fresh Police Station
Mount Vernon, Ohio, is poised to move forward with the construction of a new police station, bolstered by a projected $1.1 million reduction in city debt over the next three years. City officials state this financial flexibility will allow the city to accept on debt for the new facility without increasing taxes.
Current Debt Landscape
City Auditor Daniel Brinkman reported that Mount Vernon currently pays slightly over $2 million annually in debt service. Key debt obligations expiring in 2027 include bonds for Hiawatha Water Park and a bank loan for the Mount Vernon Avenue bridge, totaling $759,000 annually, with $362,000 coming from the general fund.
Further debt reduction is anticipated in 2029, with the expiration of a Chase bond for a wastewater project and a U.S. Bank bond for the Blackjack Road improvement project, saving an additional $325,000, of which $137,000 comes from the general fund.
Debt Capacity and Bond Authorization
The Mount Vernon City Council recently authorized the issuance of up to $29 million in bonds to fund the new police station. Andrew Brossart of Bradley Payne determined that this amount falls within the city’s debt limitations, considering:
- Direct Debt Limitation: The city is exempt from this limitation due to the application of income tax revenue to debt repayment.
- Indirect Debt Limitation (10-mill Limitation): The county has approximately $65 million in borrowing capacity remaining after accounting for the city’s $29 million.
- Ability to Repay: Calculations indicate the city could borrow up to $82 million based on its income tax revenue.
Funding Sources and Tax Implications
The city plans to use $11 million in income tax revenue to repay the bonds. Councilman and Budget and Finance Chair James Mahan emphasized that this will not require increased rates or new taxes, stating, “I think that’s incredibly important for everyone to understand. We’re not talking about increased rates or new taxes. This is within our current tax rates.”
Law Director Rob Broeren clarified that the city will utilize the 1% unvoted income tax for repayment, leaving the two 1/2% taxes dedicated to police and fire services.
Financial Officer Confidence
Auditor Brinkman acknowledged the significance of the $29 million bond, stating, “None of us would be doing our job if it didn’t [give us pause].” However, he expressed growing confidence after reviewing the numbers, noting the expiring debt and reductions in general fund payments.
The city has also taken steps to lessen the financial impact, including moving approximately $1 million in annual EMS billings from the general fund to safety funds. The city is exploring the possibility of levying administrative fees on utilities and adjusting income tax allocations.
City Treasurer David Stuller reported a $3.1 million rainy day fund, which is not currently planned for debt repayment, and expressed optimism about stable income tax receipts, stating, “As long as we have an atmosphere in Mount Vernon that people can work, I think we’ll do fine.”
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