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City Council tonight approved a $566 million spending plan that holds expenses steady for the remainder of the year while keeping city services at current levels.
Council had spent two weeks last month reviewing the 493-page budget document and listening to testimonies from the heads of each of the city’s departments and divisions.
The 2016 fiscal plan, which had been submitted to the legislative body by Mayor Frank G. Jackson, shows flat revenue in the face of steadily rising costs.
Due to cost controls and prudent fiscal management, the city had a carryover balance this year of approximately $42 million from 2015. But city officials said there won’t be carryover next year.
Despite $1.5 billion in ongoing development projects in the city, primarily in the downtown district, city revenue remains flat.
To make matters worse, the state legislature in Columbus, backed by Governor John Kasich, has severely cut Cleveland’s share of the Local Government Fund, which is a state-run, tax-sharing program benefitting cities enacted in the 1930s.
Over the last six years, the state has reduced Cleveland’s annual share of the fund by over $30 million.
Other tax-cutting measures by the state -- including abolishing the estate tax which went to cities in which the deceased had lived -- continue to hurt Cleveland.
“For the past decade, Cleveland has faced financial challenges year in and year out,” said City Council President Kevin Kelley.
“State government, through draconian tax cuts and reductions in revenue sharing, has siphoned tens of millions of dollars in revenue from Cleveland and other Ohio cities.
“So, now, we have to focus on cost control to keep services at their same levels while avoiding new fees or layoffs. With the passage of this budget, we are doing just that.”
During hearings, Council amended the spending plan to allocate $500,000 for programs aimed at curbing infant mortality.
Council also included seed money toward implementing a “violence prevention” program, which uses citizens to help curb retaliatory violence following shootings or gang fights.
The city is required by state law to adopt annual balanced budgets each year by April 1.
“We will continue to be fiscally prudent, but, at the same time, we will continue to deliver the best services possible to the citizens of this city and of this region,” said Council President Kelley.
The council president noted that beyond every-day operations of the city, the cost of a consent decree negotiated last year between the city and the federal government -- ordering reforms in the city’s Police Department – looms heavily on the financial horizon.
The city’s upfront cost of implementing the decree is estimated at $11 million, with annual costs of $7 million beginning next year and continuing for three to five years.
This year’s budget was also hit with rising personnel costs – salaries, benefits and health care – and expenses related to hosting the 2016 Republican National Convention, some of which will be reimbursed.
To help ease the city’s financial burdens and to help correct impending shortfalls, City Council, through a request by the Mayor, has introduced legislation to put a municipal income tax increase on the ballot, hiking the existing 2 percent tax to 2.5 percent.