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Published: Sunday, 10/21/2001

Toledo's economy heartens mayoral candidates Ford, Kest

BY FRITZ WENZEL
BLADE POLITICAL WRITER

Promises that Toledoans can expect more, not less, from the next administration at city hall may be helped by a better-than-expected local economy - thanks in large part to strong sales of the new Jeep Liberty.

The slumping national economy, which has now officially slipped into recession, may not have as harmful an effect on Toledo coffers as once thought, city financial managers say.

Adjustments to city spending made earlier this year appear to be holding the budget in balance, and no further cuts are expected to be needed.

News of the stabilized local economy was welcomed by the two men who are competing to become the city's next mayor - State Rep. Jack Ford and Lucas County Treasurer Ray Kest.

The election is Nov. 6.

“It's good news. I hope it holds up,” said Mr. Ford yesterday of the latest revenue projections. “There are obviously some areas that we both have said on the campaign trail that we would like to see greater support for. More planners, more inspectors, so there is still some money on the fringes that have to be identified.

“But if the budget is secure, then that is good news,” Mr. Ford said.

Last week Toledo-based Dana Corp. announced it would lay off thousands. The distribution of those layoffs in Toledo and elsewhere is unknown.

John Bibish, city finance director, said city tax projections seem to be holding up despite an economy that has taken some blows from a slowdown that has been developing for almost two years, in part because of an economic downturn and in part because of the fallout from the Sept. 11 terrorist attacks on Washington and New York.

“We took some rather significant measures earlier in the year” to deal with the city's budget shortfall. Those actions have been sufficient - so far - to keep the city in the black, he said.

“I wouldn't be recommending any changes to the budget at this time,” Mr. Bibish said. However, “the situation is so dynamic. Our local economy and the national economy have been subject to so many unusual and hopefully nonrecurring events that we want to be alert to that.”

He said his financial fingers are crossed that political and military events worldwide proceed on a more predictable course.

“Generally speaking, I don't like breaking events,” he said, because they make financial projections far more difficult to make.

If income tax revenue is a measuring stick, Toledo's economy is bucking a national trend by holding up reasonably well. A survey of 401 U.S. cities conducted after Sept. 11 by the Washington-based League of Cities shows that one in three have seen their local economies, municipal revenues, and public confidence slip since the attacks.

Among cities with populations above 100,000, 59 percent said their economies were weaker.

“It is premature to put a pinpoint on anything right now,” said Michael Justen, chief operating officer for the city, of the revenue projections.

In the cautious manner of a man who must make educated guesses about the future strength of the economy, he was optimistic that, if consumers nationwide continue to buy the popular new Jeep Liberty sports utility vehicle, Toledo could eke out a balanced budget with no threats to city services.

Mr. Justen said there is evidence that workers at the North Toledo Jeep plant have been assembling vehicles at a steady pace, local parts suppliers have been buzzing, and the positive economic activity has rippled through the city.

U.S. sales of the Liberty have been robust, rising 23 percent to 12,553 in September from August, which made the Chrysler unit of DaimlerChrysler AG feel “real good,” one official said. Through September, 45,059 Libertys had been sold nationwide since the compact SUV went on sale in May, company sales figures show.

The company sold 1,213 Libertys in Canada last month, for a total of 3,240 since sales started there in June and 675 in Mexico, for a total of 1,005 since sales started in July. Elsewhere in the world, about 700 sold last month, on top of 160 the month before, as the automaker began introducing it outside North America under the name “Cherokee.”

But all bets are off, he said, if there is another round of terrorist attacks in America.

Final numbers on city revenue for the third quarter will not be available until Nov. 15.

Mr. Ford and Mr. Kest said their top spending priorities are to bolster public safety. Mr. Ford said he would add police officers to the staff by shuffling budgets in other departments. Mr. Kest proposed last week to take $5 million out of the city's savings reserve of $14 million to “immediately” hire 40 new officers and to buy fire fighting equipment.

Mr. Kest said his plan could lower the city's bond rating because emergency reserves would be reduced, costing the city $500,000 per year in additional interest costs on money it borrows. But he said he thinks it would be worth it because the city would be more secure.

His plan would pay only the first year salary for the officers. He said he had not yet identified an ongoing source of income to pay for the additional salaries in subsequent years.

An average police officer or fire fighter costs the city $50,500 per year in salary and benefits, according to Dan Hiskey, city auditor.

Beyond public safety, the candidates have promised a concentration on basic city services, including alley cleaning, tree trimming, street lighting, and road repair. Speaking to neighborhood groups across the city in recent weeks, they also said they will emphasize economic development as a tool to increase tax revenue for the city.

Both candidates have identified projects they think will be key to growth of the city: Mr. Kest points to the burgeoning warehouse district at the southern fringe of downtown as a growth area for new business, while Mr. Ford last week said he hopes to convert the struggling North Towne Square shopping mall just off Alexis Road into a home for high-tech companies.

Mr. Ford said he would concentrate on hiring experts with heads for business to help him run the city.

“I am going to have three positions that are going to be top-notch - my chief financial officer, my economic development director, and my chief of staff,” said Mr. Ford. He said he has not yet identified people for the slots, but that he has begun searching the region for prospects.

“The city is a little bit antiquated. There are definitely going to be improvements in the accrual and accounting methods. We should be able to get readings on a daily basis,” he said.

He said he looks forward to upgrading the technology used to manage the city's accounts.

Both candidates have similar ideas to boost city income tax revenue.

Mr. Kest stressed the need to first seek more tax income by beefing up staffing in the tax enforcement office and by more strictly enforcing tax laws already in force.

He said, for instance, that he believes the city should pursue tax payments from contractors based outside Toledo who come into the city to do business. He said he believes many suburban companies are skirting Toledo taxes.

Mr. Ford said much the same thing, adding that he would stagger the schedules of some city inspectors to better monitor construction work that is done around the city by private companies on the weekends. He said he believes many companies come into the city to do work when they know city offices are closed, and therefore, are not around to enforce the city tax law.

Neither man favors increasing taxes to help pay for programs, but both are supporting Issue 6, the renewal of the city's 0.75 percent income tax, which is also on the Nov. 6 ballot.



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