The Star Beacon; Ashtabula, Ohio

Local News

July 24, 2013

Many Ohio cities have fiscal problems

Twenty-four governments and six school districts across Ohio are under state supervision to help them avoid a fate similar to what befell Detroit last week when it became the largest U.S. city in history to declare bankruptcy.

These governments are under “fiscal emergency,” courtesy of an Ohio law created in 1978 when Cleveland defaulted on $15.5 million in loans and became the first city since the Great Depression to fail to meet its financial obligations.

Two villages in northern Ohio have defaulted on a combined $500,000 in debt. Others, including Waynesville in Warren County and the Monroe school district in Butler County, are crawling out of large deficits.

Other governments not in fiscal emergency are still getting a skeptical eye from bond investors. Moody’s has recently downgraded the bond rating for Cincinnati and Middletown for reasons including concerns about the state’s pension systems.

They all pale in scale to the Motor City’s fiscal meltdown, but many share similar challenges: complaints of mismanagement, a declining tax base and increasing costs.

“Fundamentally, you don’t spend what you don’t have,” said Stanley Earley, deputy city manager for the city of Dayton, which he said is on solid financial footing. “I feel like we are managing well.”

’Tough decisions’

The largest Ohio city in fiscal emergency is Mansfield. The city of 39,346 blew through its reserves amid the Great Recession and ran out of money to pay for police and fire protection in 2009, putting it in fiscal emergency.

“I think Mansfield was in a position where many communities were, and I think we didn’t plan properly,” said Phil Messer, city special projects coordinator and former police chief.

He said the city’s income tax plummeted as many employers cut their staffs. But budget cuts didn’t keep pace.

Under fiscal emergency, a state-appointed commission forced the city to come up with a plan to right its finances. This involved laying off workers across city government and cutting many to four hours a week and raising fees for city services.

Messer said Mansfield is saving money again and is on track to be taken off fiscal emergency.

“I don’t know the details of Detroit, but they obviously didn’t take decisive action soon enough to prevent the dive,” Messer said. “Those are tough decisions to make, but they have to be made quickly and some people can do that and other people, especially when you’re in a political environment, struggle to get things done in enough time to prevent actions like that from occurring.”

Many of Ohio’s struggling communities are small villages, including Waynseville, where lax oversight and bad bookkeeping resulted in overspending by $2 million in 2005 and 2006.

The village was placed in fiscal emergency in 2008.

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