YOUNGSTOWN Judgment strikes blow to budget

The gravel remains an asset, but it's unclear if selling it would pay any judgment.
By ROGER G. SMITH
CITY HALL REPORTER
YOUNGSTOWN -- Mayor George M. McKelvey described himself as shellshocked.
His law and finance directors had just explained to him what a $2 million judgment against the city could mean for Youngstown's finances next year.
Including legally mandated interest, a city already with a deficit and layoffs could face an additional $3.5 million hit in 2003 if the ruling stands.
That adds up to about 85 job cuts just to pay the judgment, McKelvey said.
"It's catastrophic. A lightning bolt just hit city hall and cut it in half," he said.
The city will ask the 7th District Court of Appeals to reconsider its decision last week that reinstated a $2 million judgment, said Law Director John McNally IV.
Chances of a reversal appear small, considering the three-judge panel was unanimous in its decision.
The city then will ask the Ohio Supreme Court to review the case, McNally said.
The case
The city will be in a deep financial hole if the Supreme Court refuses to hear the case or sides with Allied Erecting & amp; Dismantling Co.
Allied, on Poland Avenue, won the $2 million judgment in an April 2000 trial in Mahoning County Common Pleas Court. At issue was ownership of gravel along the bed of the former Pittsburgh & amp; Lake Erie Railroad.
In 1993, the city bought the property. Allied bought items such as rails and ties. Each side contends it owns the gravel, too, which remains on the property today.
Visiting Judge Mary Cacioppo, however, overturned the jury's award. She cited technical grounds and commented that the evidence didn't support the award.
Allied appealed. The 7th District Court ruled that Judge Cacioppo erred in setting aside the jury's award and reinstated the judgment.
The city will argue that the appeals court shouldn't have reinstated the judgment -- or at least should have returned the case for retrial rather than reversing Judge Cacioppo's decision on the award, McNally said.
McKelvey questioned why the appeals court didn't send the case back for a retrial. A new trial -- rather than a complete reversal -- seems a more reasonable route at the appeals level considering the original judge set the verdict aside, he said.
The gravel remains an asset. McNally said it's unclear how much the gravel is worth today or if selling it would raise enough money to pay any judgment.
The city has no insurance to cover such a judgment.
Coming up with money
The city would have to pay the $2 million during 2003 plus 10 percent annual interest -- a figure mandated by law -- dating back as far as 1994, McNally said. That totals about $1.5 million, he said.
The city already has 60 workers laid off. An additional 64 workers have taken a $10,000 incentive to leave the payroll.
The city still must figure out how to erase a projected a $2.2 million deficit by the end of 2003 or face state fiscal watch or emergency.
The city also has to pay about $3 million in workers' compensation costs in 2003 that it didn't have this year. The city got big breaks in its premiums the past few years but won't see costs as low next year. Some of the increased workers' compensation costs already were budgeted for 2003, but not all of it, city officials have said.
A half-percent income tax increase to 2.75 percent is on the November ballot, which would generate $7.2 million. Eighty percent would go to the police and fire departments. That would bring back at least the 15 firefighters and 11 police officers on layoff. The remaining new revenue goes to capital improvements.
rgsmith@vindy.com