City's $25M deficit: 'We are all to blame'

Cincinnati is facing a $25.1 million shortfall in its upcoming budget -- the worst since the Great Recession, according to a new study from the University of Cincinnati's Economic Center.

While nobody is yet uttering the 'L' word -- layoffs -- there will have to be cuts. City Manager Harry Black is recommending the public safety forces prepare to make a three percent budget cut and everyone else prepare to make a 10 percent cut, according to a memo sent to council.

The problem: The earnings tax, the city's main source of revenue, is not meeting projections. In fact, it's coming in lower than last year at this time. And Mayor John Cranley and Cincinnati City Council -- over Black's objection -- gave city unions 5 percent raises this year, 5 percent next year and 4 percent in 2019, which has a cumulative cost of $25 million. In the 2018 budget, those raises alone account for $9 million.

Black himself pitched 3 percent raises for three years, which would have cost $8 million in 2018.

"UC gave a prediction based on past performance," said Councilman Kevin Flynn, who voted against the 2017 budget. "In the past, we have been conservative with predictions. This past year we were not. We all are to blame."

Council, he said, could not wait to spend money this year for "wants, not needs."

Black expects to present the fiscal 2018 budget May 17. It's up to the mayor and council to make changes. A final vote is due before the start of the fiscal year July 1.

The current estimated expenses for 2018 are $414.1 million; the estimated revenues $389 million, making a $25.1 million gap.

Besides the raises, Council is being asked by some in the black community to spend $18 million on items that would help end disparity between the black and white communities in Cincinnati. And council is also looking for money to cover park maintenance costs.

The budget woes come in a year when six of the nine council members are running for re-election and Cranley is facing a re-election challenge from Councilwoman Yvette Simpson and Rob Richardson Jr.

In 2013 Cranley ran on a platform that included getting the city's budget under control. When Cranley took office the budget was $352.3 million. This year it is $387.9 million.

Among new spending: $1 million a year for The Center for Closing the Health Gap, which used to get $250,000; an office of data analytics that costs $650,000; and inclusion efforts that cost $837,000.

While the city manager draws up the budget, then gives it the mayor for revisions, council has final approval.

Black's handling of the budget since he was hired in the fall of 2014 has earned the city a credit rating upgrade, largely because the budget has been structurally balanced.

Black has been warning Council for months the budget won't be as easy as it has been the past three years.

Deficits are nothing new, but they typically are more manageable, the type of shortfall that can be covered by raising parking rates or upping fees. The 2016 projected budget deficit was $3.8 million.This year it was $13.9 million. Part of this year's gap was erased when UC swept in and said the earnings tax would grow more than they previously estimated.

Not this year. Those short-term fixes have already been used in past years.

Another looming issue: talk in Columbus of further cutting the state's local government fund, which could mean the loss of $1 million to $1.5 million.

What the candidates for mayor said: 

Mayor John Cranley*

"No question we have to make cuts," Cranley said. "Just like we balanced every budget we will balance this budget by prioritizing basic services like police, fire and sanitation. It will be a great time to have a discussion about where our values are."

*While Cranley didn't vote on the budget itself, the three years of extra union raises were his initiative.

Yvette Simpson*

"Yesterday during Mayor John Cranley’s campaign announcement, he claimed he was a progressive and fiscally responsible. We knew he was not a progressive, but today’s $25 million deficit confirms that he is also not fiscally responsible. This $25 million shortfall is the worst since the Great Recession. Cincinnati needs a leader who can balance the needs of our city and the city’s budget. Yvette Simpson is that leader."

*In her role as a council member, Simpson voted for the budget and the union raises. Simpson did vote to amend the union-raise ordinances, she said, in order "to ensure structural balance and no violation of the Charter."

Rob Richardson Jr.

“This is another example of how the incumbents at City Hall have been focused on what's next politically instead of what's best long term. The incumbent Mayor pushed through a budget that was fiscally irresponsible, contrary to our city's charter and could undermine future collective bargaining. It's a total lack of leadership by the incumbent Mayor and the incumbent council member who voted in support of the process and budget. We need leadership that will not just focus on what's politically convenient and expedient in the moment.”

Enquirer reporter Jason Williams contributed