Friday, Apr 20, 2018
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Toledo is $2.5M in red; deficit may hit $5M

Toledo's money problems from unemployment, overtime, and fuel costs during the first half of 2008 have helped sink the city more than $2.5 million in the red, Finkbeiner administration officials said yesterday.

At its rate of spending, the city could end the year with a $5 million deficit.

John Sherburne, the city's finance director, said income-tax collections are below expectations for the year, property taxes are down because of revaluation of properties, and revenue from traffic enforcement cameras have fallen short.

To correct the budget problem, the city is exploring every option, including layoffs, Mr. Sherburne said.

Within the city of Toledo, 8.5 percent of the 146,300 adult workers were seeking a job

last month.

"With income taxes, if I am 1 percent off, that is $1.7 million," Mr. Sherburne said.

In addition to sinking revenues, costs are skyrocketing.

"We have higher overtime, and fuel costs are tremendously high," Mr. Sherburne said.

Though the city has used about 36,000 fewer gallons of fuel during the first half of 2008, over the same period last year its fuel cost was much higher.

Regular wages and overtime are up for the city because of higher spending by the police, fire, and refuse departments.

The city also paid a higher "severance cost," which includes payout of accumulated vacation time for retiring employees.

Councilman George Sarantou, chairman of council's finance committee, said overtime costs have been the biggest problem for the city, followed by rising fuel costs.

"The biggest contributor to the overtime is the fire department's time," Mr. Sarantou said. "They have a 103 minimum staffing level that is making the overtime soar."

The department must maintain a minimum staffing level under the firefighters' contract.

He said council and the mayor's office would work to "plug the hole" this year.

"Clearly, we are going to have to take some very serious steps, including layoffs," Mr. Sarantou said. "Police would be a last result and fire can't happen because of the minimum staffing [requirement]."

The city's tax-amnesty program, in which the city allows people to pay back taxes without penalties or interest, and the sale of city property like The Docks restaurant complex and downtown parking garages, could help correct money woes.

"These are all factors that could change that deficit, but I think we are going to have to make cuts," Mr. Sarantou said. "I don't want to assume we are going to sell property."

Councilman Joe McNamara said council should avoid using the city's rainy-day fund, which has $6.4 million.

The city's financial report for the year up to May 31, compared to the first five months of 2007, shows:

•Business income-tax revenues were down 23 percent to about $8 million.

•Overtime was up 84 percent to $2.2 million.

•Other salaries and wages, which covers the payout for accumulated vacation time, was up 79 percent to $1.3 million.

The city is in talks with American Federation of State, County, and Municipal Employees Local 7.

Mr. McNamara recently warned council that the city would not be able to continue handing out 3 percent annual wage increases to its bargaining units.

The city slashed about $22 million in spending over the last two budget cycles. Mr. Sherburne said 2009 likely will bring even more cuts for the city.

Contact Ignazio Messina at:

or 419-724-6171.

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