Youngstown's fiscal crisis demands cautious spending
It wasn't that long ago the city of Youngstown was drowning in a sea of red ink, prompting a declaration of state fiscal watch from Ohio Auditor Jim Petro. A $12.7 million deficit in 1997 is what greeted Mayor George M. McKelvey when he took office in January 1998.
With "prudent fiscal management" as the rallying cry from the new mayor, city government adopted an aggressive recovery program that focused on eliminating unnecessary spending, such as runaway overtime and unrestricted travel. Department heads were told to do more with less.
The program worked, and by the end of 1999, the city's general fund budget boasted a carryover of $3.3 million. Auditor Petro lifted the fiscal watch designation, thus allowing the mayor and city council to consider establishing spending priorities for the surplus.
But as we noted in an editorial last year supporting McKelvey's call for continued prudence, "A downturn in the national economy can easily render the city insolvent -- unless steps are taken to prepare for a rainy day."
Projected deficit: Well, that rainy day has arrived. There is talk in City Hall of a projected deficit and budget cuts in the second half of the year if income tax receipts continue the decline that began in November.
"It reflects very fragile financial times," McKelvey says. "All our decisions are tempered by that backdrop."
The administration will have a better idea of the city's financial condition by the end of this month, which means that several important capital improvement projects must be put on hold. The keyword is "hold."
Providing new quarters for the 7th District Court of Appeals remains a priority for the administration and council, but borrowing money to pay for the necessary renovation of City Hall Annex on Front Street is out of the question for the time being. The court is currently located in the Mahoning County Courthouse, but it needs more space.
Demolition: Likewise, the Youngstown Central Area Community Improvement Corp., a private-public sector organization that is steering the redevelopment of the central business district, will have to hold off on its plans to demolish downtown buildings that cannot be saved. The CIC had hoped for money from a bond sale that city officials, including Finance Director Barbara Burtner, had discussed not too long ago.
Finally, there's the proposal from the judges of the Youngstown Municipal Court for a new justice center. It would require a sizable yearly financial commitment from the city -- a commitment that neither the mayor nor council can make given the current fiscal crisis.
McKelvey has posed the following question with regard to the new municipal court: Given that the court generates $132,000 a year in revenue, where will the $346,000 to $654,000 (depending on the scope of the project) come from to meet the annual loan payment?
It's a question that demands an answer not only from the judges, but from the citizens committee that has been working with the court on the project, and from Ohio Chief Justice Thomas Moyer, who has publicly criticized the condition of the municipal court's current location.
Lest anyone think the mayor and council are exaggerating the city's financial problems, consider this: the private prison on the North Side will cease to operate in two weeks. Last year, employees at Northeast Ohio Correctional Center paid $250,000 in income tax. The prison had a payroll of $11 million.