February 2, 2002 at 12:06 AM EST - Updated July 12 at 3:12 AM
By PAUL SINGER, Associated Press Writer
CLEVELAND (AP) - Cleveland Mayor Jane Campbell (pictured, right) on Friday proposed laying off 140 city employees to help make up for a $56 million shortfall in the city's budget.
City Council President Frank Jackson said minutes later that the cuts may ultimately need to be deeper, and even more employees may be in jeopardy.
Campbell, submitting a budget of about $492 million, said, "These are incredibly difficult times for the city of Cleveland."
The new mayor said the downturn in the economy will cut city income tax and building permit revenues, and reduce the value of the city's investment portfolio.
The city had $22 million left over at the end of 2000, and former Mayor Michael R. White said the city finished 2001 with $11.8 million left over.
But Campbell said she was unable to verify that number, and concluded it would be prudent to assume there is no carryover.
The city also faces a series of one-time charges and unusual expenses, such as a 27th pay period that occurs once every 11 years, an upcoming contract settlement with the police union, and an across the board 3.5 percent salary increase for city employees.
To offset these costs, Campbell proposed reducing spending in city departments by $15.3 million. This cut will require about 140 layoffs, the mayor said, though it is not clear precisely where those cuts will be made.
As of January, there were about 9,400 people on the city's payroll.
The mayor said no uniformed police officers or firefighters would be laid off, and she is expanding the staff of the finance department to improve the city's economic development and financial management efforts.
"We are not going to get out of this problem by just cutting and cutting," Campbell said. "We have got to invest in job creation."
Economic development is the critical factor in making sure next year's finances are stronger, Campbell said.
To limit the number of layoffs necessary, Campbell skimmed funds from other accounts in the city's budgets. For instance, Campbell proposed taking $6.6 million from the city's $16 million "rainy day" fund.
"One could argue easily that it is raining," Campbell said. She also suggested shifting $15 million from a reserve fund that was previously set aside for neighborhood improvement projects.
Jackson said he is skeptical of Campbell's plan to shift funds to cover the $56 million budget gap, and that ultimately, the city may need to cut more jobs.
He said it is not wise to take money out of the rainy day fund, which is intended to serve as a reserve to prove the city's creditworthiness. Having less money in the fund may make it harder for the city to get loans, Jackson said.
"The administration is counting on money that may not be there," Jackson said. "If you have to do deeper cuts, it will translate into additional people being laid off."
City Council has to review Campbell's budget proposal and pass a final budget by April 1.
(Copyright 2002 by The Associated Press. All Rights Reserved.)