In audit, problems targeted

The state audit draws attention to Girard's deficient management practices.
By TIM YOVICH
VINDICATOR TRUMBULL STAFF
GIRARD -- State Auditor Jim Petro is calling for sweeping changes in the way this debt-ridden city does business.
The litany of recommendations, including layoffs in municipal courta and a tax increase to generate revenue, are contained in the long-awaited performance audit released this morning.
The audit, which will serve as the framework for Mayor James Melfi's recovery plan, was initiated after Petro placed the city under fiscal emergency Aug. 8 because the community defaulted on loans and is in red ink.
Melfi said the recommendations will be contained in his plan that will be presented to city council and the state oversight commission in March.
Summing up problem: Describing the city as being in a crisis, the audit says, in part, "In short, the city's spending has outpaced its revenue. That problem is due, in part, to substandard management practices."
At the end of 2000, the general fund had a deficit of nearly $800,000. It increased to about $1.5 million by the end of last year.
Based on financial forecasts, the audit predicts other fund deficits ranging from $100,000 to $1.8 million by the end of 2006.
In addition, the city had outstanding loan balances of $4.9 million and defaulted on two loans.
In pointing out deficient management practices, the audit calls attention to the fact that money to pay on projects of significant financial commitment was not put aside until the city began receiving bills for the work.
A 0.8-mill tax levy approved by voters that brought $95,000 annually was allowed to expire without being put before voters for renewal, the audit says, and income tax and water and sewer rates have not increased sufficiently to meet expenditures.
For example, the city income tax collection peaked at $3.5 million in 1998. It decreased to $3.37 million in 1999 and $3.38 million in 2000.
The city expects collections to decrease to $3.2 million this year, through 2004.
Since 1995, citywide debt has increased dramatically -- from $6.36 million in 1995 to $12 million.
Loans, not levies: One reason is that the city got commercial loans and used city revenue to pay for projects such as construction of the justice center and underground utilities along U.S. Route 422, rather than asking voters to approve levies.
Buying Girard Lakes also added to the debt.
While the city bought the lakes and surrounding property for $2.51 million, council minutes over the past six years reflect little substantive discussions about doing so.
Discussions centered on fishing and whether boat motors should be allowed on the lakes, according to the audit. Vindication for mayor: In dealing with the justice center, Melfi, who took office in 2000, was vindicated.
The mayor has taken the position that the center that houses the municipal court and police department cost $5.2 million, while municipal Judge Michael Bernard placed the cost at $3.5 million.
The audit placed the cost at $5.3 million. & ordm;Melfi has called for layoffs in the court, but Judge Bernard hasn't agreed to that.
The audit calls on the court to lay off the equivalent of 41/2 full-time employees and calls attention to the high cost per case compared with similar courts.
At the same time, the police and fire departments were not overstaffed before layoffs, the audit concludes.
The audit suggests opening wage negotiations with unions.
It notes that fire captains and firefighters are paid 24 percent more than those in cities of about the same size.
Police officers are paid 14 percent more, heavy-equipment operators 16 percent more and light-equipment operators 24 percent more.
Some areas, such as a computer clerk and cashiers, are paid less.
yovich@vindy.com