Bell pursues big pay cuts, tax increase; mayor hints at takeover by state

1/22/2010

Toledo Mayor Mike Bell officially offered a plan yesterday to balance the $43.8 million general fund deficit by increasing the city's income tax along with slashing employee salaries and benefits.

The mayor acknowledged that the plan - which he stressed was only a "starting point for discussions" with City Council and city unions - has several components that are outside of his control.

The plan relies heavily on voter approval in May to increase the income tax to 2.5 percent from 2.25 percent to generate $7.5 million beginning July 1.

It also requires city unions to agree to a 10 percent wage reduction for all general fund jobs to save nearly $7.1 million, eliminate the employee pension pickup to save nearly $6.7 million, and have employees pay 20 percent of health care costs to save $2.8 million.

"I can't bet on that, but what I can bet on is if we don't fix it, someone's going to fix it for us, and it may be inclusive of some of the things we are talking about without any types of options to it," Mr. Bell said after the plan was presented to council.

He was alluding to a state takeover of the city's operations.

An Ohio city that defaults on its debts or payroll or can't control its deficit can be brought under the supervision of a seven-member commission reporting to the Ohio auditor.

The commission would have the power to enforce its recommendations by preventing a city from borrowing money.

"What I am saying, if we get into a fiscal emergency or we go bankrupt, it will be fixed and … there will not be a whole lot of discussion to it," Mr. Bell added.

The mayor said the city would have to persuade voters to approve the tax increase.

"You are going to have to go out to our public and be able to discuss it on a very clear and transparent basis," Mr. Bell said. "The problem I think we are still working through, and people don't realize it, is that no mayor, and never at any point in time, has the city been at [a] $44 million deficit. … It's going to take a large thinking-outside-the-box concept and for people to step up."

The mayor also suggested asking voters to transfer $3.75 million from the city's capital improvements budget, which pays for street repair, to the general fund, which pays for things such as police, fire, and garbage pickup.

That would be similar to a ballot referendum called "the Safety First plan" that voters rejected on Sept. 15.

That measure would have reduced the 2009 general fund deficit by $3.9 million by moving that amount from the capital improvement plan budget.

Two union presidents rejected givebacks to balance the budget.

Dan Wagner, president of the Toledo Police Patrolman's Association, repeated his claims that the city's assumption for income tax collections this year are way too low.

In a letter last week to Toledo City Council, Mr. Bell said the city could expect $202.27 million in revenues this year - which includes an estimated $136.1 million from 2010 income taxes. That figure is down from an estimated range of $138.7 million to $140 million expected to be collected for 2009.

Mr. Wagner said he expects the economy to rebound in 2010 and that the city will be able to afford his union's contract, which was signed last year.

"My membership has made it very clear to me that if there was a vote, they will not reopen their contract," he said.

Don Czerniak, president of American Federation of State, County, and Municipal Employees Local 7, also said his union would not agree to concessions.

"I am not willing to concede into giving back anything right now," Mr. Czerniak said. "That's a 40 percent wage reduction on top of what we have already given back and no one in this country, besides those laid off, are taking a 40 percent hit in their wages."

Wayne Hartford, president of Toledo Firefighters Local 92, did not return telephone calls seeking comment.

The other suggestions made by the Bell administration are:

•Collecting $1.18 million from the $2.2 million of outstanding red light camera fines.

•Selling city properties such as The Docks to raise about $3 million.

•Delaying reduction of the monthly trash fee to collect $2.7 million.

•Cutting the general fund budget by $3 million by using other funds to pay more city salaries.

•Saving $1.5 million by cutting funded positions that are currently vacant.

•Increasing the delinquent income tax collection program to generate $2.5 million.

•Adding staff to collect $1 million out of the $8 million in accounts receivable owed the city.

•Deferring police and fire compensatory time payouts until 2011 that are owed this year under their union contracts to save $2.1 million.

•Reducing the $583,000 funding for "downtown incentive program" by $225,000 in 2010.

•Eliminating festival fee waivers to gain $52,000.

The mayor's 11-member "citizens special investigation" task force, which he appointed to analyze income and expenses, pension and benefit liabilities, and overtime costs, meets for the first time Monday afternoon.

Councilman George Sarantou, finance committee chairman, applauded the mayor for personally presenting the plan, but said he wants to see recommendations from the task force.

"They start on Monday and let's let them do their homework, and labor is a part of that," Mr. Sarantou said.

Contact Ignazio Messina at:

imessina@theblade.com

or 419-724-6171.