BY WEDNESDAY, the City of Toledo must adopt a balanced budget for 2010. Citizens should understand how the city got into its financial crisis, what city government has done to cope with it, and where Toledo's future lies.
We have a large deficit mostly because our income tax collections have dropped over the past two years by $28 million. In 2007, we collected about $169 million. In 2008, we collected $154 million. Last year, it was about $141 million.
The mild recession of 2007 became the Great Recession that started in September 2008. That month, our national economy began to unravel. Wall Street institutions such as Lehman Brothers and Goldman Sachs virtually collapsed. Banks got in trouble, real estate values plummeted, and foreclosures reached record levels.
Toledo's unemployment rate has skyrocketed to nearly 14 percent today, from 8.7 percent in September 2008. In the past two decades, our city has lost more than 20,000 manufacturing jobs because of new technology, corporate downsizing, and international competition. The 2.25 percent income tax that the city collects is paid only by people who are employed or own a business. Social Security, dividends and interest, and workers compensation and unemployment benefits are not taxed.
About 40 percent of Toledoans do not pay the city income tax. Unlike the Toledo Public Schools, the Metroparks, the public library, the zoo, and the Children's Services Board, the city has maintained its tax rate since 1982.
During the past three years, the mayor's office and City Council have controlled the general fund budget by curbing spending. This discipline largely amounted to not filling positions and even reducing staff in many city departments,
The general fund today includes 1,658 employees, down from 2,087 employees 10 years ago. Toledo has nine municipal employees per 1,000 residents, a lower ratio than in any comparable Ohio city. Akron has 9.5 city workers per 1,000 residents. Columbus has 10.5. Dayton has 13.4. Cincinnati has 19.0. Cleveland has 20.2 employees per 1,000 residents - more than twice as many as Toledo
Services mandated by Toledo's City Charter, such as refuse collection and the court system, account for more than 97 percent of the general fund budget. Add the Taxation and Human Resources departments and demolition services, and it's 99 percent.
City Council members and Mayor Mike Bell have offered a number of proposals to fix our deficit problem. Selling city-owned properties - such as The Docks, Erie Street Market, and real estate in Monclova - makes sense. We must move forward.
Proposals such as levying higher taxes on citizens who live in Toledo but work outside the city, raising trash collection fees, taxing sports and entertainment tickets, and seeking employee concessions are among other major proposals to help eliminate the deficit.
Council members are carefully considering all of these options. We want to be fair to everyone, including taxpayers.
Times are challenging in Toledo, but they also are difficult in Maumee and Waterville and across Ohio. All 50 states and most U.S. cities and counties are encountering major economic problems because of lower tax receipts. Not one economist, public official, or financial guru predicted in August, 2008, that our country would suffer this much.
We will get through these tough times. There are no easy answers, just hard decisions for the City Council and mayor. I believe our best days are ahead of us, because of the diversity of our community and the strength of our people.
We need to stay positive and recognize that the world has changed dramatically in the past 10 years. As city employees, citizens, and elected officials work together, we will emerge stronger and wiser. Toledo will remain a leader in the United States and a great place to live, work, and raise a family.
George Sarantou is Finance Committee chairman of the Toledo City Council.