Saturday, September 29, 2001

Cities tighten financial belts

By Andrew Welsh-Huggins
The Associated Press

        COLUMBUS — As the state announces a $500 million budget shortfall, more than half of Ohio cities also say their revenues are down and budgets are tight.

        “It's just a matter of not panicking and just hanging tight for the ride,” said Christopher Grimm, mayor of Tallmadge in suburban Akron where the city is facing a $500,000 deficit this year on its $10 million budget because of falling income tax revenues.

        The city of 16,000 saw comfortable revenue increases of 5 to 8 percent in the 1990s, before the economy began to slow. Now, Tallmadge is cutting back on training and travel, eliminating furniture purchases and slowing work on a recreation center.

        During the 1990s, more than half of Ohio cities reported growing revenues, said John Mahoney, deputy director of the Ohio Municipal League.

        Now, more than half say revenues are down.

        “Our cities face the same sorts of pure budgetary problems that the state's facing,” Mr. Mahoney said. “Our heavy expenditures are in personnel like police and fire, so it hits us in a different way than the state, and we don't have the external pressures they do, but still the pressure's there and the revenue's not good.”

        Ohio, which cut $180 million from its budget last year, is predicting a $500 million budget shortfall this year and another $500 million shortfall next year.

        In addition to falling revenues, the “external pressures” the state faces include Medicaid spending and a court-ordered school-funding fix that could hit $1.2 billion annually.

        In Warren in eastern Ohio, despite a tax increase that took effect in July, the city received $200,000 less in income tax collections in August than the previous year and is looking at another shortfall this month.

        Mayor Hank Angelo blamed layoffs in the steel industry and predicted a drop in retail sales as the economic fallout from the Sept. 11 terrorist attacks continues.

        The city increased taxes to raise an additional $1.5 million for the remainder of the year to rehire police and firefighters laid off because of a previous deficit.

        On Wednesday, Columbus Mayor Michael Coleman announced that city income-tax revenues are growing at their slowest rate since 1961.

        The slowdown won't affect basic city services, such as snow removal, trash pickup and police and fire operations, said Coleman spokesman Mike Brown.

        But beyond that, “there are some tough choices ahead,” Brown said.


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