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Niles mayor says water dept. deficit likely prompted state oversight
By Ed Runyan
NILES
Mayor Ralph Infante says the $2.7 million deficit in the city’s water department fund as of this summer is probably the reason the Ohio Auditor’s Office placed the city in fiscal emergency Tuesday, even though the city’s overall deficit is much lower.
The city has money in other funds to offset much of the water department deficit that was reported July 31, and Infante believes the city will end the year without an overall deficit, but he agrees there is a lot of work ahead to rectify the city’s financial problems.
The state auditor’s office said the city was running an overall deficit of $61,093 as of the end of July 2014 but had a deficit of $487,973 at the end of 2013.
“We’ve taken all the steps to reduce costs in all departments,” Infante said of reductions in personnel he has made since 2009 to cope with the loss of income-tax and interest revenues when the U.S. economy soured in 2008. “We took steps by leaving 22 jobs unfilled,” he said.
“The city of Niles faces a dire financial challenge,” Ohio Auditor Dave Yost said in a press release announcing the designation. “This office stands prepared to help the city conquer it.”
In January, Niles Auditor Charles Nader said the $2 million water department deficit was the result of rate hikes from the Mahoning Valley Sanitary District and costs such as hospitalization.
The city increased water rates 12 percent effective in February and sewer rates 15 percent effective in March, something Infante said the city wanted to avoid passing along to customers as much as possible.
Infante wrote to the Ohio auditor in March, asking for an analysis to determine whether the city’s financial condition justified a designation such as fiscal emergency or fiscal watch.
Infante said he was expecting it to be fiscal watch but said fiscal emergency might correct the city’s problems quicker. Fiscal emergency involves oversight from a financial planning and supervision commission.
A financial plan must be developed by Infante and approved by the commission within 120 days of its first meeting to address the city’s financial crisis, according to Yost’s office. The state auditor’s office serves as financial supervisor to the commission and sometimes provides accounting training and assistance to the city, a press release says.
Infante said it can be difficult to change some costs, such as the pay and benefits of employees because they are covered by labor agreements. He noted that the current cost of health care for city employees is $4 million.
Infante said he has implemented some of the recommendations of a performance audit released by the state auditor’s office Sept. 11, but there are more to implement.
Infante said he thinks the city’s time in fiscal emergency will be “quick” because there are new businesses opening in Niles and some being expanded that should help with revenues, such as income taxes.
The city lost revenue with the closing of General Electric and Amweld factories in recent years, but the new Cafaro Co. corporate offices being built at the Eastwood Mall, new Gabriel Brothers store, expansion at L.B. Foster Co. on Salt Springs Road, new Toyota of Warren dealership coming to state Route 46 and a couple of new restaurants suggest that income taxes will rise, the mayor said.