The city of Toledo either has a $326,000 surplus to stick in a rainy day fund or it just has a rainy day with no extra money to sock away.
Two Toledo councilmen, with the backing of three certified public accountants and the city auditor, are disputing the Bell administration's claim that the city has a surplus from 2011 that it can deposit into the city's "budget stabilization fund."
Councilman D. Michael Collins first raised the issue last week and then investigated further after the administration asked council to approve moving that amount of money into the rainy day fund. He called it a "myth" that the city has that money available.
Mr. Collins said Mayor Mike Bell's top financial officials are incorrectly saying the city can "unilaterally unrestrict a fund."
Both he and Councilman George Sarantou, head of council's finance committee, said the city actually has a $5.7 million deficit because the money in question is restricted for specific uses and cannot be used for other purposes.
Mr. Sarantou said it is misleading to say the city has a surplus.
"There is no surplus," Mr. Sarantou said. "There is a $5.7 million deficit that has accumulated over the years and part of that has to be earmarked for the Hoffman Road Landfill closure. There is a federal EPA mandate that we set aside money each year for that. The $5.7 million is the result of expenses that exceeded our revenues the past few years."
City Auditor Scott Wheelock, in a letter to Mr. Collins, concurred with his assessment.
"I discussed this with Kerry Roe, a partner at Clark Schaefer Hackett, our public accountants. He and I agree with your analysis," Mr. Wheelock wrote. "The general fund does indeed have a positive fund balance of $326,000, however it is made up of two parts: the first part is $712,000 in inventory ... this is not cash that can be used for general purposes. The second is $5,376,000 that is cash but has restrictions placed on it by third parties."
His letter also states: "most of this amount represents the 'reserve' for the closing of the Hoffman Road landfill and cannot be used by council or the mayor to meet future expenditures of the city."
The two councilmen Tuesday grilled the Bell administration on the issue at a council agenda review meeting.
A balance sheet provided to councilmen by Mr. Collins shows more than $5.3 million of city money listed as "restricted investments" and $712,000 as "inventory of supplies."
Deputy Mayor Steve Herwat stood by his analysis and promised an explanation for councilmen during their next regular meeting next Tuesday.
Mr. Bell Tuesday also discounted what Mr. Collins and Mr. Sarantou were claiming.
"They're wrong," Mr. Bell said.
Mr. Roe could not be reached for comment.
Clark Schaefer Hackett, a certified public accounting firm based in Cincinnati, released its independent audit on the city of Toledo’s 2011 financial statements on Aug. 31 but the Bell administration did not release the document to council until last month. It found problems that included overlooked regulations and sloppy record keeping. It listed 19 specific problems, which detailed things the city did wrong, did late, or didn’t do at all. There was also an additional nine findings against the city by the firm.
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