Threat of fiscal emergency is very real in Youngstown
Youngstown Mayor Jamael Tito Brown has made no secret of the fact that city government is standing on economic quicksand.
Thus, Brown, who insisted during the 2017 mayoral campaign that he would not lay off any employees to cut costs, now faces the very real possibility of a state takeover of the city’s finances.
At issue is his refusal to repay $3.1 million out of the general fund to the water, wastewater and sanitation funds as sought by Ohio Auditor Keith Faber.
The dollars from those three independent accounts were used for economic development projects during the tenure of then Mayor John A. McNally.
The state auditor has ruled that such expenditures were improper because they weren’t directly related to the operations of the water, wastewater and sanitation departments.
Brown and officials of the auditor’s office have been negotiating a repayment plan for more than a year, but an agreement has eluded them.
Indeed, the mayor all but challenged Columbus to call his bluff.
“Despite the city’s best efforts, the auditor would not budge from forcing the city into an unaffordable repayment option that would jeopardize city services and employees,” he said. “The city cannot and will not agree to place such a burden on its citizens.”
It is revealing that Brown is also battling the Ohio Environmental Protection Agency, which has delayed about $12 million in financing to upgrade the waste-water treatment system.
The upgrade, ordered by the federal Environmental Protection Agency, has a price tag of $160 million.
The state wants the city to raise sewer rates to generate revenue to repay the $12 million. There isn’t enough money in the city’s wastewater fund to cover the cost of the improvements to be undertaken with the state loans.
In March, with fiscal reality staring him in the face, the mayor made it abundantly clear he wasn’t about to pull the trigger.
“Am I ready to raise rates?” Brown asked. “My response at this time is no.”
Five months later, he still hasn’t made a decision. Instead, the mayor is seeking another study to determine just how much – if anything – Youngstown residents can afford to pay.
STATE’S OFFER TO THE CITY
The state auditor’s office is aware of Youngstown’s economic challenges, which is why it offered the city a 15-year repayment period for the $3.1 million.
The state insists the money should come out of the general fund, which is where it was deposited before being spent on the economic development projects.
State officials say they’re “disappointed” with Brown’s response.
“Because the auditor understands the city of Youngstown’s challenging financial position, we have attempted to work through extraordinary efforts to reach a resolution on the repayment,” said spokeswoman Allison Dumski. “The auditor of state’s focus is always on what’s best for the taxpayers.”
Thus the question: What is best for the taxpayers of the city of Youngstown, which is facing a bleak financial future?
The population continues to decline, the tax base is shrinking because a growing number of residents are on fixed incomes, and job-creation efforts aren’t keeping up with recent losses in the private sector.
In addition, Brown continues to drag his feet on slashing the city’s payroll and reducing overall spending.
The answer to the question is obvious – given the political considerations that come into play: state-mandated fiscal emergency.
With a special state fiscal oversight commission controlling the city of Youngstown’s treasury, the mayor and city council would be off the hook insofar as dealing with the myriad challenges confronting government.
As the recent fiscal emergency designation in the city of Niles showed, red ink was erased; voters approved an income- tax rate increase; new contracts were negotiated; and the cost of health insurance for employees was lowered.
To be sure, there was a great deal of complaining on the part of some Niles city officials and others. However, the sweeping authority granted the fiscal oversight commission by state law negates any objections.
Fiscal emergency is lifted after a five-year budget recovery plan is developed by the mayor and city council and approved by the state.
The blueprint must show that the budget would be balanced each year.
With regard to Youngstown, the commission would study city government’s ledger – revenues and expenditures – and future obligations to determine the course of action to meet the demands of residents, on the one hand, and federal and state governments, on the other.
The bottom line: There are no easy solutions – and time is running out for Brown and his administration.