Thursday, Apr 26, 2018
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Toledo finance officials projects $7 million deficit



The City of Toledo expects to be short about $7 million at the end of this year, but finance officials Thursday could not fully explain from where much of that deficit comes.

At a committee hearing to discuss the city’s finances, department director Patrick McLean said $2.2 million of the city’s projected shortfall for this year comes from a miscalculation of the carryover deficit for 2010. The gap comes from housing demolition costs the city had not foreseen or had not expected to pay, officials said.

Another $2 million hole results from a shortfall in federal grant money that the city had been relying on to hire police officers, Mr. McLean said.

The finance director, and other officials, said some of the home demolitions costs were left over from 2009 and 2010. The city initially budgeted the costs as an expense that would be paid back by property owners, commissioner of accounts Paul McArthur said, but over time most owners did not pay and the costs remained on the city’s books. He did not have figures to show how many property owners had failed to pay for the demolitions.

The Acting Commissoner of purchasing, Brian Benner, then provided numbers on the average cost of each housing demolition — $4,250 — and the number of home demolitions from 2009 to date: 892. But when Councilman D. Michael Collins pointed out that the figures didn’t add up to $2.2 million, officials could not explain why and instead answered that they would look into it.

Councilmen were also puzzled over the source of funds for the housing demolitions in question and how this affected the general fund, something the finance department could not explain.

“You need to do some auditing,” Councilman D. Michael Collins scolded. “If you went into a business meeting to explain that to somebody on a board, there’d be a whole lot of people not sitting at their desks the next morning.”

Mr. McClean deferred further questions to officials from the city’s neighborhoods department, who did not return calls for comment Thursday evening.

Later, the finance director also could not explain why the federal police grants were miscalculated, and said it is an issue his department is looking into. When contacted by The Blade, Police chief Mike Navarre said he knew nothing about any grant shortfalls.

“I don’t know what you’re talking about. All the grant money that we were expecting and we projected, we have already been awarded,” Chief Navarre said. “There’s no issues with our budget, I can tell you that.”

The projected deficit and the uncertainty over how it came about alarmed several councilmen who attended Thursday’s committee hearing.

Councilman George Sarantou said the numbers came as a surprise because the city’s finance reports had been more optimistic in previous months.

“We have a lot of unanswered questions,” Mr. Sarantou said. “They need to get us some answers, and clearly the finance department has their work cut out for them.”

Councilman Adam Martinez said he was “a little dumbfounded” by the deficit numbers. He said money for demolition should have been paid for using federal money and well monitored, and should not cause a deficit in the general fund. Police grant monies should also have been easy to calculate, he stated.

“I think (the meeting) raised a whole lot of confusion as to why our deficit is as large as it is, and unfortunately no one really had any answers,” Mr. Martinez said. “I think a lot more research is needed.”

Mr. McLean said it is not unusual for the city’s deficit numbers to change after a budget is approved. Although the 2011 budget was approved in March, the finance department did not finalize its 2010 books until June of this year, he said, which resulted in the demolition cost discrepancy.

“It is not uncommon that our end of the year carry-over deficit or surplus is different from what we present to council (at budget time),” Mr. McLean said. “We’re constantly finalizing the numbers.”

The finance committee has to have a presentable budget proposal ready by Nov. 15. Mr. McLean said numbers could fluctuate between now and then.

Other areas contributing to the deficit, according to the finance department, are a projected $1.2 million in extra fire department overtime costs; $700,000 in higher-than-expected medical costs; $1.3 million in projected cost savings that were never realized, and $1.6 million from a timing discrepancy in how the city collects and pays for trash collection. Some of the extra expenditure is offset by better-than-projected income tax revenue.

Contact Claudia Boyd-Barrett at or 419-724-6272.

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