Financial crisis in Niles demands true leadership

The strategy adopted by Mayor Thomas Scarnecchia of Niles for dealing with city government’s fiscal crisis may be good politics, but it’s bad public policy. Indeed, should the mayor continue on this path of fiscal destruction, he will have earned the wrath of the residents.

What is the strategy being pursued by Scarnecchia to lift the city out of state-mandated fiscal emergency? Simply put, it can be likened to rearranging the deck chairs on the Titanic. He refuses to recognize that the city is sinking fast financially and that only a change in course will prevent total disaster.

With government spending more money than it is taking in, the obvious answer is to reduce costs. And since most of the dollars in the operating budget are dedicated to employee wages and benefits, the solution is staring the mayor in the face.

However, Scarnecchia has chosen to put politics before responsible governance. By refusing to implement an across-the-board reduction in the payroll, he is making a bad situation worse.

Last week, in an unusually blunt public assessment of the situation, one of the financial supervisors appointed by Ohio Auditor David Yost had this to say:

“Unfortunately, the city has chosen not to take a lot of our ideas [and] it is difficult to help when our ideas aren’t considered.”

Nita Hendryx was addressing the statutorily created Financial Planning and Supervision Commission that has controlled the city’s finances since 2014 when Auditor Yost declared an emergency.

Hendryx’s assessment was echoed by fellow supervisor Tim Lintner, who has been brutally honest over the past several months about the lack of political leadership in dealing with the city’s financial crisis.

While Hendryx and Lintner did not refer to the mayor by name, their criticism of what has not occurred in City Hall left little doubt that the buck – if one can be found – stops with him.

Election endorsement

We endorsed Scarnecchia, a former city council member, in last year’s general election for mayor because he promised to do whatever was necessary to erase the red ink in the budget. In the Democratic primary in which he defeated incumbent Ralph Infante, Scarnecchia blamed the mayor for city government’s problems.

But it now turns out that the fiscal recovery plan developed by Infante before he left office in December included proposals that had the imprimatur of the state commission. The plan included two major proposals: outsourcing income-tax collection; moving police dispatchers to the Trumbull County 911 Center.

But Scarnecchia rejected both proposals and developed his own recovery plan that was approved by city council and the commission.

However, the plan fails to address the underlying problem confronting government: the payroll. Although Scarnecchia laid off some workers and has achieved significant reductions in health-care expenses, the general fund is still bleeding red ink. At last count, the projected deficit was $130,000 – with no foreseeable new revenue.

The financial supervisors made it clear they weren’t in favor of the mayor’s plan and pointed out that his refusal to outsource tax collection is a point of contention for them.

Indeed, The Vindicator has reported that $154,000 in uncashed corporate and residential income-tax payments remained in unopened boxes for more than a month in the treasurer’s office. The treasurer at the time, Robert Swauger, has since resigned.

Jim Armeni, a liaison for state Auditor Yost, didn’t mince words when he said last week, “There’s no reason why those boxes were there, and no leadership for the last 18 months. Outside collection is a permanent solution, and we aren’t wavering from that.”

While a member of the commission, John Davis, voiced opposition to the tax outsourcing and questioned the value of former Mayor Infante’s proposals, Armeni stood firm on this position.

“We’re not seeing major progress,” he said. “If you follow the [financial supervisors], you’re going to be fine.”

Here’s a reality check for Scarnecchia and the rest of Niles government: Only the state auditor has the power to release the city from state-mandated fiscal emergency.

As things now stand, the prospects of the mayor and council taking control of Niles’ finances do not look promising.

The need for leadership is clear.