Mayor: City May Be Facing Deficit Of More Than $30 Million

By M.R. KROPKO, AP Business Writer

CLEVELAND (AP) - Mayor Jane Campbell said Thursday the city is facing a possible budget deficit of at least $30 million this year, but the total could increase as city auditors find unpaid bills.

Campbell has asked city departments to draft spending plans with cuts of 10 percent and 15 percent, in case such cuts are necessary.

"One of the very disturbing things that we seem to be finding now is that there are unpaid bills from 2001, and we're trying to find all those," she said. "We've got to know what the city owes and we've got to pay our bills."

The $30 million deficit arises from expected additional costs for labor this year, required by quirks in the city's contracts.

For instance, 2002 will have one more pay period than 2001. The city is also in contract talks with the police union on providing back pay for some employees.

Former Mayor Michael R. White appears to have made no provision for covering those costs, Campbell said, and the city expects no increase in revenue.

Campbell also said she has been unable to locate an $11.8 million surplus from 2001 that White said he was leaving. In his final press conference in December, White said was leaving the city in strong financial condition.

"I expected that we would be able to walk in, work the computer system and have it show you a balance, and that it would be $11 million," she said. "Unfortunately that's not the case. There just hasn't been good fiscal control," she said.

Campbell spokesman Rodney Jenkins said, "If things stay as they are, we're in real financial trouble."

Campbell said she is close to naming a new controller and is considering a member of Ohio Auditor Jim Petro's staff.

Petro said Wednesday the city's bookkeeping is so bad that it will take until April to determine Cleveland's bank balance. Petro, whose auditors have been studying the city's books since 2000, said as of now "nobody knows how much money they have."

He said all other major cities in the state knew their bank balances by Dec. 31.

Petro's office is helping the city develop new financial management procedures, and will offer by April a blueprint for reorganizing the finance director's office, said spokeswoman Kim Norris. But she said Petro's office cannot help the city balance its books.

Councilman Michael Polensek, chairman of the City Council Finance Committee, said the council has tentatively scheduled a retreat Jan. 20 with the mayor's staff to discuss city finances.

"What is clear is none of us can figure out at this point where the documents and the money are," Polensek said.

White, who was reported earlier in the week to be on vacation in Hawaii, could not be reached to comment on the city's finances. A message seeking comment was left Thursday at his home.

Petro also released two special audits Wednesday that show the city misspent hundreds of thousands of dollars in state grants.

Petro's auditors found that Cleveland spent $720,000 in state money designated for air pollution control for other purposes. The Ohio Environmental Protection Agency said it will negotiate with the city for a reimbursement.

Cleveland earlier repaid the federal government more than $600,000 that the city misspent in the same air pollution program.

The second audit involved the Jobs Training Partnership Act and the Empowerment Zone, two programs that have given the city millions of dollars in federal grants. The money was intended to pay for job training for low-income residents and for renovations to a career center.

The audit found that the city and its contractors could not account for hundreds of thousands of dollars. It also found the city failed to seek federal reimbursement for $1.7 million spent in the programs, meaning Cleveland taxpayers paid the cost.

(Copyright 2002 by The Associated Press. All Rights Reserved.)