Saturday, June 14, 2003

Monroe tries to fix money mishandling

New tax needed; books in 'a mess'

By Michael D. Clark
The Cincinnati Enquirer

MONROE - Residents of this small but booming city might have to pay higher taxes to cover budget problems that are continuing to surface after the abrupt departures of the city manager and finance director.

A veteran city councilman, backed by internal documents obtained by the Enquirer, blames the two recently resigned officials for mismanaging millions of dollars while keeping City Council members in the dark for years. One internal memo recounts repeated bank overdrafts, inappropriate shifting of funds between city accounts and even budget information presented to council that "had no basis in reality."

Monroe City Councilman Robert Youtsler criticized former City Manager Donald Whitman and former Finance Director David Collins for mismanaging and misrepresenting financial data for the city since 1999, leading to depletion of the city's cash reserves by more than $1 million and leaving an estimated deficit of $5 million in the city's annual operating budget of $10.5 million.

"This is the worst financial crisis this city has ever seen," Youtsler said. "I'm a councilman, but I'm first a responsible citizen and that's why I'm doing this."

A June 24 public hearing will be the first of three to get residents' input on what sort of tax issue the city should put on the November ballot. Officials are considering either an income tax hike from 1 percent to 1.5 percent or a 5-mill property tax increase that would cost the owner of a $150,000 home an additional $227 annually. The city has more than 8,000 residents.

One internal Monroe city memo, obtained through an Ohio Public Records request, adds details to Youtsler's complaints.

According to the March 25, 2003 memo signed both by William Brock, the acting city manager who replaced Whitman after he was pressured to resign in late February, and Jay Stewart, director of development and acting finance director for Monroe after Collins' resignation last month, there has been a series of erroneous and mismanaged budgets in recent years. Whitman was hired in 1998 and Collins in 1999. Brock and Stewart wrote that since 1999, budget data have not been accurate and funds have been used in ways that may have violated state laws.

No Monroe city officials, however, have accused Whitman or Collins of committing any theft. Neither the Monroe police chief nor Butler County prosecutor's office have been asked to look into possible wrongdoing.

However, some residents are upset.

"I don't want to pay more taxes because of the city's incompetence. Taxpayers should have been told what was going on months ago," Monroe resident Andrea Fink said Friday.

The city memo was generated after some city council members, including Youtsler, became increasingly suspicious of the reliability of financial information on which they had been basing many crucial decisions in recent years.

"It's been an absolute betrayal of trust. This made council look like we were derelict in our duties but we weren't," said Youtsler. "Everything we voted on we would always ask the appropriate officials if we had the money to do it and they told us that the city could afford it."

But Whitman countered that he is just as surprised as council members about Monroe's financial problems and said that when he was city manager, he depended on Collins' work as financial director.

"I received financial information I thought to be accurate, and I relied on that financial information that was presented to me," Whitman said. He declined further comment.

Whitman and current officials said they were reluctant to comment because of terms of his separation agreement, in which both sides agreed to avoid disparaging comments.

Collins did not respond to repeated phone messages.

Statements made by Brock and Stewart in their internal memo to council include:

• "Information provided to council in June 2002 overstated the beginning general fund balance for 2001 by approximately $1.1 million and overstated beginning general fund balance for 2002 by approximately $100,000."

• "$700,000 has been taken from the Sanitary Sewer Fund" in early 2001 to pay for general operating budget debt: "This was a direct misuse of funds."

• "First Southwestern Bank representatives indicate that massive amounts of overdrafts began occurring in mid-to-late 2002" and bank officials expressed concerns about the city's account more than two years ago.

"It is apparent that neither the city manager nor the finance director took it as their responsibility to control the budget," the memo states.

"It's a mess. It's so incredible and it touches on every aspect of the budget," Brock replied, when asked this week for comment.

The city has already seen $750,000 in budget cuts this year and the cessation of all capital improvement projects, road projects and other improvements. There could be layoffs - including police and fire personnel - later this year if residents vote down a tax increase.

"We're still finding things," Brock added of his and Stewart's efforts to analyze the city's operating budgets from 1999 to the present, in part with the help of an independent auditing firm that will complete its report in July.

Rick Kremer, city council member and chairman of the finance committee, said he had been "trying to get reports out of Collins for a long time but that Collins blamed the delays on computer software."

As concerns grew about the city's budget, council in late December shelved plans for a $300,000 memorial park. But not before buying a $52,000 bronze eagle - with a seven-foot wingspan - that would stand in the park.

Monroe resident Thomas Kidd, the leader of a petition effort to put a charter amendment on the fall ballot to re-install part of a tax credit that council removed in December to raise more money, blasted officials for proposing new taxes.

"It's an irresponsible decision on the part of council to ask us for more tax money," he said.


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