Chillicothe — In his 23-minute briefing in the latest council session, Mayor Luke Feeney ended by explaining how he is guiding the city into dealing with the loss of revenue from closure of the paper mill.
Pixelle Specialty Solutions has finally shut down operations, and most of the 830 employees at the time of the April 15th announcement have been laid off. That means a major drop in the income taxes that the city partly depends on to fund the government.
He had pointed out in an April council session:
- The Pixelle paper mill is the city’s largest employer; there are larger ones outside the city limits, but 100% of mill employees pay the city income tax.
- That is $1.4M to $1.5M, about 8% of the city’s total income tax.
- In 2013, the calculated impact of the mill was 13% – now it’s 8% thanks to continued diversification of the local economy.
- But that does not include ancillary businesses like timber and mill maintenance.
- The income tax is the city’s bread and butter, but it also impacts on other income streams.
On Monday, Feeney said he is working with the City Auditor on different projections and scenarios for that impact on city funding. He said the general fund has a decent amount of reserves, but various departments do not. For example, if Parks & Recreation loses 10% of their funds, then they are down to only their park income tax revenue.
So, Feeney said city divisions, departments, and funds are now working out how to save money. Retaining employees is his goal, though he said employee attrition and a shorter seasonal employee season are part of the strategy.
Feeney said they have started the budget compilation process by asking each department to calculate a 20% cut in operational expenses other than personnel.
He said the city must also consider what “burn rate” would be tolerated in each fund under current operations – that is, burning through money while not knowing when more will come in – on top of what state law requires for a balanced budget.
Feeney asked, is it ok with burning thru $1M in the first year? $25K? And, this is what “rainy day” type funds are for.
Also, he said Pixelle was a very large consumer of city water (even though they drew huge amounts for paper production from their own wells) so there is lost city revenue there.
Feeney also covered street paving and Yoctangee Park plans.
He said there were two to three more weeks (now one to two) left in the paving program.
Carlisle Place, the street up the hill, had been closed briefly for paving – but another closing was needed there to make test borings…because the road is starting to slip down the hill at the bend, and plans need to be made to deal with that.
Feeney said next year’s street work, funded by the state, will have three components: 1) minimal street paving, 2) a permanent retaining wall for the slip along Belleview Avenue, and 3) the slip repair on Carlisle Place.
The mayor said the Appalachian Community Grant Program work on city streets around Yoctangee Park would start in the next 45 days on Water Street.
He said the original plan was for wider sidewalks, but with price increases, there will be less width. But, there will still be the “road diet” that council approved. So, we will see street construction outside of the regular paving schedule.
Feeney pointed out that a renewal of the city paving levy that had been in place for 9 1/2 years did not get to the board of elections in time for the fall election – after failing to be placed on the spring election – so the city will collect only 1.8%, instead of 2%, starting on January 1st.
That means there will not be enough funds for a standard paving program in 2026. But, he said the city had always planned for “gap year:” they can still do paving in ’26, but it will be scaled back. The application for state funding will now primarily be for paving instead of repairs and rebuilding.
Feeney said he hopes council will consider putting the levy on the spring ballot.
The mayor also addressed councilman Gunner Barnes’ comments on the Chillicothe Youth Football League. It has grown greatly over the last several years, and has outgrown their home in the park – with the pressure point being parking.
Feeney said the city will work on making parking on the northern pod of the softball fields possible, with an agreement on repairing turf damage in time for softball games.
Feeney also covered other aspects of the paper mill closing, and the Wear-Ever groundwater pollution, in the first part of his briefing. You can read about those, and hear them in the first video, in a related story. Hear his second part, in his own words, below.
