PENINSULA — A quaint village nestled in the heart of Cuyahoga Valley National Park is going broke.

Peninsula officials must cut more than 10% from the village’s budget to prevent the city from running out of money by 2023.

Mayor Douglas Mayer and Fiscal Officer Deborah Wordell gave the grim report during a special Village Council meeting Tuesday night to the three council members from the six-person panel in attendance. Because there wasn’t a quorum, no action was taken.

"We will be out of money,” Mayer said. “And right now, we are spending a lot more than what we are bringing in. ... This is basically letting us know we're in trouble. We feel there are ways that we can fix our problems, and we're gonna have to be very drastic.”

Mayer said the village is projected to spend about $120,000 more than it brings in a year, meaning the village must cut at least $120,000 from its $1.1 million budget. He said it would be better to cut $150,000 to have “expense money.”

Mayer said he expects the state to intervene once it sees the village’s precarious financial situation.

“[In] 2023, we won't have the money to cover our expenditures,” he said.

The U.S. Census Bureau estimated the village’s population at only 558 in 2018. But some of the more than 2 million visitors venturing into the nearby Cuyahoga Valley National Park definitely stopped in the village, using the roads and other village services — but not paying for them as taxpayers.

The village, which becomes the North Pole during the Cuyahoga Valley Scenic Railroad’s annual Polar Express train ride, has several small shops lining the streets of its tiny downtown catering to the hikers and bikers visiting the national park. Those businesses include a bicycle shop and a skate and snow shop.

There also are a few restaurants, art galleries and other small shops, plus a stop on the scenic railroad.

But other than tourism, there is little in the way of industry in Peninsula, where the national park owns much of the village’s property, turning tax-paying parcels into tax-exempt federal land. The village loses out on both property tax not paid on the land and income tax that would otherwise be paid by people living on the land if it weren’t owned by the park.

None of that helps the village’s rocky financial status.

“This is something, we don't have a choice. We have to figure out how to save $150,000, and it's ... going to be terrible,” Mayer said. “It's going to be a hard way to go.”

What happened?

Council members Dee Holody, Michael Matusz and Daniel Schneider attended Tuesday’s meeting, while members Richard Fisher Jr., Michael Kaplan and Chris Weigand were absent.

During the meeting, Wordell presented a recent financial history and forecast of the city’s major operational funds to explain how the village got where it is and provide a “guesstimate” of where it’s going.

Using an average of the last five years, Wordell projected revenues for each year from 2020 through 2023 for the village’s general, street and police levy funds — its three major operational funds — will be close to $910,000, but its expenditures for the three funds are expected to be more than $980,000 each year.

Wordell listed several possible reasons for the trend, including increasing costs for benefits and decreasing income tax revenue. But Wordell — who became the village’s interim fiscal officer last fall, with the interim label removed in January — said she plans to dig into the village’s finances to look for other reasons.

Wordell said the four significant revenue generators for the city’s general fund are a 2% income tax from village residents, a 2% income tax from people who work within the village’s joint economic development district with Boston Township, property taxes and funding from a police contract with Boston Township to provide police services in the township.

With its 2% income tax, the village collected $439,000 in 2016 and $456,000 in 2017. But last year, the amount was down to $400,000.

Residents who work outside the village are given a 100% tax credit for the amount they pay to other communities.

"The revenues, I don't know that we have a lot of control over,” said Wordell, who’s also finance director for the village of Reminderville.

Mayer said Peninsula would lose $60,000 a year without the police contract with Boston Township.

The Village Council is considering renewing that contract, which runs through the end of this year. Mayer said he wasn’t comfortable entering into a three-year contract knowing in the third year, the village is expected to “go broke.”

“We can't fulfill a three-year contract at this time unless we make some drastic changes,” he said. “We can't, and I don't feel good or comfortable as the mayor to enter into any contract until she [Wordell] can tell us we're fiscally sound.”

What can be done?

Mayer said already, half of the Village Hall isn’t used, most of its positions are part-time and the fiscal office was consolidated, saving more than $20,000 a year.

Mayer said the village’s only options for reducing expenses are in three areas: the police and road departments and the solicitor position.

“Every one of those areas, everybody has a personal attachment to, so it's going to be hard,” he said.

The village’s staff includes the fiscal officer, two administrative assistants, two road department personnel and 22 police officers, most of whom are auxiliary officers working limited schedules.

All the village’s positions are part-time — “almost as an as-needed basis,” Mayer said — except for the police chief, a police sergeant, a detective and the road supervisor.

Mayer said the council voted to change the road supervisor position to full-time this year, making the job the village’s highest-paid position, with an estimated gross pay, including overtime, of $43,270. When benefits are included, the amount is $84,056.

“That was a mistake council made,” Mayer said. “In this area, we went too far.”

Mayer also said the cost for the solicitor’s position increased $40,000 in five years. According to the resolution reappointing the current solicitor, the position is paid a fixed monthly retainer of $5,195 a month totaling $62,340 a year. Mayer called the position a “luxury expense, at this point.”

Both Mayer and Wordell emphasized the police department’s finances have been “efficient,” “consistent” and “stable.”

“Even though the police department has been stable this whole time, there are ways you can cut the police department to save money,” Mayer said.

“I don't want to see it broken down,” he added. “It might have to be ... It might not be a choice.”

Councilwoman Holody said she expects part of the problem comes from buying new vehicles — the village replaces one of its five police vehicles each year — and the increasing cost of road salt. The village also opts to pay for new vehicles and other costs upfront instead of taking loans to pay incrementally, she said.

Wordell gave the example of buying a new vehicle every other year instead as a way the village could save money. She also said she can shop out health insurance for the department’s full-time employees to look for lower rates.

Mayer, who is nearing the end of his second term as the village’s part-time mayor, still is deciding if he’s running for a third term on the November ballot.

“We didn't monitor our spending,” he said. “Council didn't monitor it, and there were many bad decisions and bad investments, and this is where we're at today.”

Wordell is planning to put together a list of the village’s top 10 to 15 expenses and meet with department heads to discuss potential cuts, with additional future meetings to be scheduled.

“Still plenty of time to make changes,” Wordell said. “But that's what it's going to take in order to bring it back in line with where you want to be.”

Contact Emily Mills at 330-996-3334, emills@thebeaconjournal.com and @EmilyMills818.