SYLVANIA, OH (Toledo News Now) – The City of Sylvania approved a budget with a $1.4 million deficit Monday, but they say they won't have to make any cuts to make up for the deficit.
Every year since the recession, the City of Sylvania has been working hard to work their way out of debt. They expect to see a balanced budget in 2014, but they still have their work cut out for them.
Sylvania Mayor Craig Stough said the deficit is related to millions of dollars in cuts coming from the state level, but also to lower property taxes, inheritance taxes, and investment income.
Despite the deficit, no cuts will need to be made, thanks to smaller government and additional revenue expected from a hotel-motel tax.
"We still have sufficient reserves in place," Stough said. "We're making this transition without any reduction in services or increases in taxes and we're fortunate that we have those reserves, but we're scaling back our government to the new realities of our economy and state funding."
The city plans to save a large chunk of money by not filling some positions vacated by retirement, and filling some positions with a smaller income.
They are also counting on a new hotel-motel tax to generate revenue, but the tax will come at a cost to customers and business owners.
A hotel-motel tax would equal an increase in room rates for customers, and $70,000 in extra revenue for the city.
Lucas County started a hotel-motel tax of 10 percent in 1987. At the time, Sylvania only had one motel and did not fully take part in the tax. When the Wingate by Wyndham was built in 2003, the city was denied by Lucas County Commissioners to include a 3 percent tax in with the county's tax.
Now the city wants to start collecting that 3 percent. Wingate General Manager Lea McLaren said that would put the hotel's taxes at 19 percent – 7 percent higher than other hotels in the area. They would lose business.
"It really can be detrimental," McLaren said. "If [customers] are shopping around for hotels and they can go 10 miles down the road and pay almost 10 percent less in taxes, it's huge…especially with the economy how it is today? People are definitely not going to stay here."
McLaren asked the city council for when a decision will be made so she can notify guests who have rooms booked if their rates have to increase. Council said the higher tax rates will need to be collected for a part of the new year while negotiations can be made with Lucas County Commissioners.
Council has already decided the revenue generated from the hotel-motel tax will be used to fund community programs in 2013.