Warren tax necessary, but changes are too
Warren city leaders knew or should have known for years that the cash reserves they were eroding in order to balance the budget would not last forever.
In seven of the last 10 years, the city spent more general fund money than it brought in. Over the last four years alone, the city spent nearly $3 million more than it generated. This pattern has eaten away at Warren’s rainy day fund and the reserves it has in the hospitalization and workers’ compensation funds — all of which were used to balance budgets through the years.
No business or household would ever run that way, yet Warren officials continued to operate on that premise, spending until the cash reserves ran dry, and knowing when that day arrived, they would ask taxpayers to cover the deficit.
That time is now. Warren residents will vote Nov. 8 on a new half-percent income tax levy. If approved, it will generate $3.5 million to $4 million. That’s more than the city needs to cover the estimated $1.5 million shortfall, but necessary, they say, to get ahead and stay ahead. They promise the funds will go only to police, fire and roads.
In arguing for passage, Warren Mayor Doug Franklin said the city cut 81 positions since 2008. Other cost savings have come in merging the city and county 911 dispatch centers, estimated to save about $450,000. Police and fire rank reductions are expected to save more than $1 million, and there are other cuts as well.
Revenue losses that have contributed to the city’s shortfall included loss of about $630,000 a year in local government funds and more than $400,000 a year in inheritance tax from the state.
Job losses also cut into the city’s income tax collections, including Delphi’s 2005 bankruptcy; closure of the GE Lamp Plant in early 2014, losing about 200 jobs; and RG Steel’s closure in 2012, that lost more than 1,000 jobs.
“We had to adjust on the fly,” Franklin said.
But we question whether that’s a good description. On the heels of these job losses in 2005 and 2007, the city’s expenses still surpassed its revenues. The same is true in 2012, 2013, 2014 and 2015.
For this reason and others, we are reluctant to support the levy. We are disappointed the administration wasn’t more forthcoming about the looming crisis during their re-election campaign. Also, the city’s track record shows that past leaders have fallen short on promises when new taxes passed, specifically in the addition of new safety forces.
Still, there is no denying the city’s general fund is in serious financial distress, and without the tax’s passage, significant layoffs and cuts are imminent. It is, indeed, city residents and businesses that will suffer the hit if police are laid off and roads are not maintained.
For that reason we endorse the tax, provided several conditions are met, including serious pursuit of other cuts:
l consider outsourcing the Warren income tax department;
l explore police/fire department mergers, a unique plan that has been successful in other parts of the country;
l weigh the effectiveness and possibly eliminate the Community Development Department in favor of creative new economic development efforts;
l consider selling the sanitation department’s garbage collection routes to private trash haulers; and consider selling the city-owned golf course. Each of these might generate significant one-time windfalls while eliminating future financial risks;
l And should voters defeat the tax, city leaders must reject the fire department’s SAFER grant. Under the grant, the city would be obligated to maintain fire personnel with no layoffs. Rejecting the grant would ensure that a significantly disproportionate amount of layoffs does not occur in the city’s police department.
We feel strongly that city leaders have continued to operate as status quo for too long. There is no chance of keeping this tax increase temporary without significant changes in operations and philosophy. Without embracing new ideas like these or others, the city has no hope of becoming fiscally sound.
If this administration isn’t able to do that, then they should step aside and let someone else try.