Girard emerges from fiscal emergency

By Ed Runyan

runyan@vindy.com

GIRARD

The Ohio Auditor’s Office, which released Girard from fiscal emergency Thursday, made it clear in a report that the city’s financial problems extended beyond just overspending to acquire the Girard and Liberty lakes and other capital projects.

The city was placed in fiscal emergency, and a seven-person fiscal planning commission was put in place in 2001, partially as a result of deficit spending. The city had a deficit of $800,000 in 2000 and $1.5 million in 2001.

When that fiscal emergency was ordered, the Ohio auditor at the time, Jim Petro, said the city was in crisis because of the overspending. “That problem is due, in part, to substandard management practices,” he said.

Thursday’s report lists 16 pages worth of management practices that the city has worked more than 10 years to correct.

In every case, the report says the city has rectified the problem.

For example:

In 2002, the city had no long-term plan or budget for its primary operating funds. In 2011, it presented a five-year forecast.

In 2002, the city did not have a long-term capital budget identifying anticipated projects and the means of paying for them. In 2011, the city had one.

In 2002, the city wasn’t including all the funds in its budget that the state required it to budget. In 2011, all necessary funds were in the budget.

In 2002, the city allowed expenditures to exceed the appropriated amounts authorized by city council, but in 2011, it happened only in one fund that was not required to be budgeted.

In 2002, the city didn’t have an off-site backup of all of its computer files, but in 2011 it had such a backup at a second city building.

“This day is the culmination of more than a decade of hard work and sacrifices made by the people of Girard,” Ohio Auditor David Yost said in a press release. “It’s good to see the city rise from its fiscal troubles and come out stronger and financially stable.”

Sam Zirafi, Girard auditor since just after the city’s financial crisis came to light in 2001, said the state would not have lifted the fiscal emergency if the city hadn’t corrected every one of the 70-plus items it said were wrong.

The biggest change resulting from losing the fiscal-emergency designation is that the fiscal- planning commission now is disbanded, and the city will be back to handling all of its finances.

“It will be up to the city,” he said. “You have to be smart and only spend what you have. The administration and council has the sole authority to make all the decisions regarding the city.

“We used to have to run all of our decisions past the commission before we made them,” he said.

The city had come close to leaving fiscal emergency in 2006, but the closing of the city’s largest employer, Indalex, produced a financial problem.

The Great Recession of 2008 caused another. The city found its financial legs again in 2010 and 2011 as a result of money generated by the expansion of V&M Star.

To improve its finances, the city eliminated nine jobs and raised water rates on four separate occasions, Yost said. Girard voters also passed two five-year, 3-mill levies in 2005 and 2010 to add between $360,000 and $375,000 in annual revenue.