It’s the last thing East Cleveland needs. The State of Ohio delivered a sobering blow to the beleaguered city recently when they declared it in a state of “fiscal caution.”
Ohio’s Auditor of State David Yost made the announcement at East Cleveland City Hall joined by Mayor Gary Norton, Jr. and City Council President Dr. Joy Jordan. Yost said the city is $5.8 million in the hole from, coming up short in 15 different municipal funds, per the findings of a 2006-2008 audit.
This is not the first time that officials in Columbus have had to intervene in East Cleveland’s finances. The city was under fiscal emergency from 1988 to 2006.
East Cleveland is limited in the options they have to increase their revenue. In the short term, a half-percent tax increase is being discussed along with additional fees for trash services.
Residents also voted in November to keep the city’s traffic cameras and the revenue they provide. They became the first municipality in the nation to vote in favor of the devices. Estimates show the cameras provide about $1 million to the city every year. The money from keeping the cameras was tied to the salaries of dozens in the city’s public safety area.
Auditor Yost also wants East Cleveland to think long-term and regionally about other ways to collect money.
“Both the mayor and city council are seeking creative solutions to the city’s fiscal challenges,” said Auditor Yost, according to WOIO-TV.
“New development, outsourcing and regional partnerships are all being utilized to help bring stability to this community. I encourage them to continue to pursue these types of opportunities,” he added.
Fiscal caution is the first of three steps the state auditor can take to help municipalities correct errant accounting situations. It is considered a warning before a fiscal watch or emergency is issued in order to give cities more time to get on track. This new tactic was approved by the Ohio General Assembly in its last legislative session. Other cities, such as Akron, have also found themselves under fiscal caution from Yost’s office.
Many observers would ask how did East Cleveland get back into a difficult financial position after just leaving fiscal emergency.
The main issue is the population decline of the city. Currently, they are hovering around 17,000 residents, a decrease of 34 percent since 2000, according to the 2010 U.S. Census.
Like many cities across Northeast Ohio, the Great Recession dealt the biggest blow to the small, urban city. As foreclosures skyrocketed in the area, East Cleveland was not immune. Homeowners walked away from houses leaving properties sitting empty. This cut into the city’s property tax coffers, forcing it to scale back some services.
Huron Hospital, which was East Cleveland’s only hospital and a former Level II trauma site, was closed by Cleveland Clinic Health System in October 2011. Revenue from the medical facility provided over $1 million annually for the cash-strapped city. Losing the hospital was a major blow for city officials who immediately began discussions about cutbacks in other areas of city services.
Now East Cleveland must deal with its financial turmoil. In the next 60 days they will have to present a budget to the state auditor to address the deficit issues. Beyond that, this is going to be a major test for its residents and leadership on how to address the true causes of the city’s financial bleeding.