Signs of deficit may date back to May
3/19/2004The city of Toledo's finance department could have known as early as May that revenues from the state's utility taxes were not rolling in as predicted.
Due to an apparent change in how taxes on electric light companies, such as Toledo Edison Co., are distributed, the city received only $193,154 from the state last year - far less than the $1.003 million received in 2002.
That $800,000 dip in the annual utility tax is being blamed for part of the $2.2 million shortfall that was discovered last week. The rest of it is blamed on lower-than-expected income tax withholding and payments.
The $800,000 gap also cost former Finance Director John Bibish his job.
Mayor Jack Ford plans a search to replace Mr. Bibish, who was demoted Wednesday to a commissioner's post.
The mayor has appointed Tom Crothers, the deputy director of economic and community development, as the acting finance director.
According to information provided to The Blade, revenue from the state's utilities tax was flowing at a far lower rate in 2003 than in the previous year:
●In 2002, the city had $437,328 in hand from the state by May 30. As of May 30, 2003, the state had disbursed only $70,232 to Toledo.
●In August, 2002, another payment, totaling $446,463, had been received. On the same date in 2003, only $56,494 was collected.
●The final payment in 2002 was $119,351. The final payment in 2003, dated Nov. 28, was $66,427.
Jay Black, Jr., Mr. Ford's chief operating officer, said the change in the city's share of public utility taxes "should have been addressed earlier in the year." And he said the finance director should have contacted the state to see why such a dramatic decrease was occurring.
City Councilman George Sarantou, the chairman of council's finance committee, said Mr. Bibish mentioned the shortfall in utility taxes in an update of city revenues in December, and was asked by council to look into it.
"We asked for a definitive answer and we never got it," Mr. Sarantou said. "He reported to us that we hadn't gotten what we had got the year before. It appeared to be a huge difference."
Mr. Bibish did not return a call yesterday seeking comment.
In conducting a search to replace Mr. Bibish, Mr. Ford treads a path that he has been on before.
As a candidate and as a new mayor, Mr. Ford promised a national search to find a new chief financial officer.
However, his search was not successful and Mr. Bibish continued as finance director, the job to which he was appointed by former Mayor Carty Finkbeiner in 1999.
Mr. Black said the search will begin regionally. He said he is looking for someone who has "a fair amount of experience in this type of environment, in public finance."
Mr. Bibish's demotion came after the mayor's consultant, Theodore Mastroianni, who is working on a $5,000 monthly contract, was called in last week to lead the investigation into why the city was blind-sided by a $2.2 million shortfall.
Mr. Bibish will serve as a commissioner in the finance department, filling a position that has been vacant for about a year.
Mr. Bibish's subordinate, former Taxation Commissioner Clarence Coleman, also was demoted to a lower-paying administrator job.
Contact Tom Troy at:
tomtroy@theblade.com
or 419-724-6058.