The City of Vermilion has accumulated a general fund surplus of approximately $5 million, prompting ongoing debate over how the money should be used. The surplus follows years of conservative budgeting, but it has also raised questions about whether residents were overtaxed.
City officials have described the surplus as an opportunity to address long-standing infrastructure needs, including mandated wastewater treatment improvements and deteriorating road conditions.
In a presentation to City Council, the administration proposed using surplus funds to support the Wastewater Fund and Street Fund. Officials cited limited wastewater reserves, currently around $2 million, and the absence of any large-scale road repair funding as justification for the request.
According to the mayor, Council declined to make a large one-time allocation from the surplus and instead opted to redirect $500,000 annually from income tax revenue that has historically supported the city’s roads fund. While this mirrors a proposal voters rejected in 2023, that ballot issue involved rolling back a municipal tax credit. The charter does not require that funds from the credit be used exclusively for road repair.
Council members also raised concerns about maintaining high wastewater rates without a finalized cost estimate for treatment plant upgrades. Earlier projections suggested the project could cost $76 million, but more recent discussions suggest a lower figure is likely. Without a confirmed amount, some council members argued that current rates were too high.
In response, Council passed Ordinance 2025-34, rolling back a 48% sewer rate increase that had gone into effect earlier in the year.
Road funding remains part of ongoing discussions, but long-standing disagreements over which areas should take priority have complicated decision-making. While the administration has identified certain roads in need of repair, how or whether the surplus will be used for those projects remains unresolved.
Meanwhile, a newly filed class-action lawsuit has added pressure to the ongoing financial discussion. The lawsuit alleges that Vermilion residents were overcharged on their local income taxes from 2018 to 2022 due to a misapplied tax credit. While the city restored the full 1% credit earlier this year, no refunds have been issued for the affected years. The case remains pending in Lorain County Common Pleas Court.
As budget talks continue, the $5 million surplus remains a focal point. Some view it as a chance to fund overdue infrastructure repairs, while others see it as a sign that residents have already paid too much. Council has not finalized a long-term plan for the surplus, and further decisions will likely depend on the outcome of legal and infrastructure developments still underway.
