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Published: Friday, 1/30/2009

City officials drop $8.1M bombshell

BY IGNAZIO MESSINA
BLADE STAFF WRITER

The city of Toledo is still facing a whopping $8.1 million deficit for 2008 even though Toledo City Council thought that year's budget woes were fixed when it redirected $8 million of unspent capital improvement money to help plug the hole.

Finkbeiner administration officials dropped the bombshell on council's finance committee yesterday during its monthly review of the city's revenues and expenses.

Toledo Councilman George Sarantou said he expects yesterday's announcement means more city employees will be laid off. Councilman Mike Craig predicted "massive cuts."

"Needless to say, right now it's not a happy ending," said John Bibish, commissioner of Toledo's budget office. "The majority of the problem we face is the revenue."

Toledo's bottom line has been slammed by increasing unemployment. As a result, income tax collections - which represent more than 66 percent of the revenue supporting the general fund - are projected to drop from $173.2 million in 2008 to $169.6 million in 2009, the same amount collected in 2007.

Many in the Finkbeiner administration concede the number could get worse.

Toledo's $6.4 million rainy-day fund could be applied to the 2008 deficit, but $2 million of that money is already earmarked for the 2009 general fund budget - a spending plan that represented $21 million in cutbacks.

Councilman Joe McNamara reacted yesterday with disbelief to the 2008 budget deficit.

"Wow. There is no rainy-day fund and we still have to come up with $2 million," he said.

City Finance Director John Sherburne said a plan is being developed to address the problem.

The brief report on the 2008 budget was sandwiched between a presentation on income tax collections and a report on a proposal to save millions through either buying automated refuse trucks or privatizing the city's entire trash collection program.

Mr. Sherburne acknowledged that the deficit amount for 2008 is at this point still a "best guess" because income tax collections for December have not yet been reported.

The city's unemployment in December was 10.7 percent - the highest rate among all metro areas in Ohio, according to the Ohio Department of Job and Family Services.

The city also now predicts the previously assumed revenues for 2009 will be lower than expected - which will mean more cuts, said Mr. Sarantou, chairman of council's finance committee.

"If I were in the executive branch of government I would trim as much excessive spending [as possible] and you have got to address personnel," Mr. Sarantou said.

"You have to keep fueling police cars, you can't stop paying health care for the employees, so clearly, this will mean more layoffs."

Mr. Craig faults Mayor Carty Finkbeiner's administration for the 2008 problems and thinks his 2009 spending plan is misleading.

"They knew what had to be done back in June and they weren't doing it," he said. "All we are doing is delaying the inevitable for a year. If we don't balance 2008, we are going to be in receivership. If we do balance 2008, at the end of 2009, we are going to be in receivership."

Fixing the problem will be painful, Mr. Craig said.

"There are going to have to be massive cuts - as if the cuts we've had so far aren't massive," he said.

"I don't care what anyone says, this has been pretty drastic so far."

The city budget, approved earlier this month 7-5 by council, does not include money to hire police cadets and firefighters. It calls for layoffs, mandated unpaid time off for city employees, closing all but one public pool, a reduction of funds for the city's criminal justice program and Toledo Municipal Court, and wage freezes for city workers.

The Finkbeiner administration is still considering a partial citywide shutdown beginning Feb. 16 that could last for up to a week for most nonsafety service employees.

The move is expected to save the city $2 million.

Robert Reinbolt, the mayor's chief of staff, said more layoffs could be possible, but he is hoping the city's unions will agree to concessions to save money.

Employees in the 800-member American Federation of State, County, and Municipal Employees Local 7, the largest city of Toledo union, narrowly voted last week to accept a new three-year contract that freezes salaries for the first two years while raising co-pay costs for health care, among other concessions.

Contact Ignazio Messina at:

imessina@theblade.com

or 419-724-6171.



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