The Star Beacon; Ashtabula, Ohio

Local News

July 24, 2013

Many Ohio cities have fiscal problems

(Continued)

the oversight of a commission of state and local officials. Earlier this month, the village submitted its 17th recovery plan to the Auditor of State’s Office and signed up with the auditor’s office for its recommended software package.

“We think the time is now,” Mayor Dave Stubbs said Monday when asked when they will emerge from fiscal emergency. The village has had that designation since April 2008.

Unice Smith, who oversees the fiscal emergency program as chief of local government services at the state auditor’s office, said the commission has recommended Waynesville be removed from emergency status and her office is reviewing some details from its now-balanced five-year budget.

Since 2010, residents have been paying a 1 percent income tax enacted to erase revenue deficits.

“The money is not the issue. It’s accounting, accounting principles,” said Stubbs. “We think we have all of those accounting principle gaps filled.”

Monroe schools

Monroe Local Schools Superintendent Phil Cagwin said his district went on fiscal emergency when its new treasurer realized they had been using money earmarked to repay a bond for operating costs and hide an operating shortfall.

To balance its budget, the school had to borrow $3 million from the state - which it has 6 years to pay back - to catch up on bond payment, pass a 7 mill emergency property tax levy to make payroll and cut 19 teachers, administrators and support staff.

“Now we’re on the right track,” said Cagwin, who recently took over the post. “In hindsight, they should’ve passed an operating levy earlier.”

A wake-up call

Smith said there is no over-arching theme for the 24 governments on fiscal emergency. Many are small villages with treasurers who may not have adequate training. The village of Manchester has been in fiscal emergency for 15 years.

There have been 40 local governments and 33 school districts that have passed through the fire of fiscal emergency. Locally, this includes Monroe in Butler County and West Elkton in Preble. School districts that have survived fiscal emergency number 33, including Jefferson Twp. local schools in Montgomery County and Springfield City Schools.

Several school districts, including Fairborn and Tecumseh Local School District in Clark County, have threatened that they may be headed to state oversight if upcoming levy requests fail.

Ultimately, government defaults and especially bankruptcies are exceedingly rare, officials point out, especially in Ohio, which has this oversight function to help governments.

But Detroit still serves as a wake-up call, according to Joshua Smith, city manager of Hamilton.

“Detroit is the beginning of many city governments recognizing they must dramatically change the way scarce resources are allocated,” he said. “It is a very difficult conversation to have, but it is imperative that governments recalibrate and focus limited resources on investing in parks, streets and other infrastructure versus continuing down a road like Detroit, where it promised retirees pension and health benefits and simply can’t afford to pay them.”

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