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Sunday, February 10, 2008

Cincinnati City Spending Report: Save Surplus, Shaky 2008 Economy Could Hit Hard

CINCINNATI (TDB) -- The memo -- which is dated tomorrow -- says Cincinnati finished 2007 with a $13.3 million surplus in the city treasury. It urges officials to immediately save $4.8 million because 2008 is shaping up as an economically tough year. It notes the city's financial reserves are "slightly below" recommended levels and that an extended run of slow economic times could play havoc. No deficit is forecast by the city finance office, but clear warnings were issued about deteriorating conditions. The memo along with all the numbers can be accessed online here. A couple of the pertinent paragraps:

"Rating Agencies -- Both rating agencies (Moody's and Standard & Poor's) continue to take notice on the City's recent trend of passing structurally imbalanced budgets. This item will continue to be a concern of theirs and may have an effect on future credit ratings of the City.

"2008 Economic Climate -- It has been well documented and discussed nationally that there are various economic indicators that suggest an 'economic slowdown' for the first half of 2008, the effects which may manifest itself later in the year or even in 2009. Because our General Fund revenues are largely dependent on income taxes, it is too early to tell what affect those economic indicators will have on our local economy and what impact they may have on our estimated 2008 revenues. Therefore is is my recommendaation that the entire $4.8 million be saved (ie. remain in the unappropriated surplus of the General Fund) in order to offset any potential downturn in 2008 and/or 2009 revenues that may arise as a result of a slower economy."

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