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September 21, 2011
The Honorable Dave Yost
Ohio Auditor of State
88 East Broad Street, 10th Floor
Columbus, OH 43215
Dear Auditor Yost:
It is my understanding that legally the City of Portsmouth has been and is now in a state of fiscal emergency. With the experiences I had as mayor, it is my opinion that the only way that financial stability for the city can be restored is through intervention by your office. Having worked with Auditors Barga and Thompson, I know they are fully aware that I inherited a $1.2 M. deficit at the beginning of 2010 and that the city council refused to enact my balanced budget but instead enacted a planned deficit budget in 2010 and have done so for 2011 as well. This is unheard of.
At my request, your office conducted the city’s 2010. It confirms that the city auditor, city council, and previous mayors have violated state statutes by consistently using restricted enterprise and special revenue funds to pay for general government operations. Water, Sewer, Sanitation and State gasoline funds have been diverted to pay for salaries and benefits and general fund operations and services. As an example, in the 2011 city budget, over $1 million of water (enterprise) revenues are being used to pay part of the salaries and benefits of fire department employees. Yet water lines continue to break over and over. A plan for replacing aged lines doesn’t even exist. The disruption and cost of these breaks to residences and businesses continue. The destruction to the streets likewise get no or insufficient attention.
Further bad public policy move is afoot. At the September 12 council meeting and as a way to partially address the city’s budgetary crisis, City Solicitor Michael Jones suggested the city petition the Scioto County Court of Common Pleas for permission to transfer capital monies into the operating budget to help offset the deficit. The city should not be allowed to raid capital funds to pay for operating expenses. There are desperate capital projects for which these funds should be expended. The voters approved these capital funds and mandated in the city’s charter they be spent for capital projects, not general operations. The city previously petitioned the Court of Common Pleas in 2003 for use of the capital monies and Judge Harcha approved the transfer, but warned the city not to make the request again.
To date, there has been no discussion and no planning at all undertaken to address the deficits. The council put an income tax increase on the May primary ballot and it failed. There is another on the November ballot. Even if the tax increase passes, the funds will be insufficient to address the depth of the financial well dug by this government these past 10 years. The salaries are not the problem. It’s the benefits.
It is my opinion that, because they benefitted too, the elected officials contributed to the financial disaster by approving union contracts such that the city pays all pension contributions – the employees contribute $0; employees contribute a mere $25/individual and $50/family monthly for insurance premiums and this only began in 2009; the council gave themselves the same health insurance benefits in the late 90s – though this action was challenged in court and rejected – the benefit continues to this day; 3 weeks of vacation leave after one year employment, 4 after five years, 5 after ten years and 6 after fifteen years (a month and a half); generous sick, holiday, funeral, etc., etc. leave, and the list of benefits go on.
Though the 2010 Audit warns the city not to expend enterprise and restricted funds for other purposes, the city intends to continue this process. At the last council meeting and by emergency action (also contrary to law), the council approved a proposal by the city auditor to spend $8,000 for a consultant to devise sufficient rationale for the city to continue to raid these funds as they have in the past.
Having been a local government professional for many years, I can attest to the desperate situation of the city’s infrastructure, the myriad problems facing our neighborhoods, sewage backing up in dozens of people’s homes, crime, drugs, prostitution…and the list goes on. Yet none of these issues have been nor will be addressed fiscally should the city continue down the same financially disastrous road.
I join others and respectfully request that you: 1) take over the financial responsibilities of the city similar to your actions for Scioto County; and, 2) do whatever you can in your capacity as Auditor of State to stop the city government from using capital funds for the intent and purposes described above, and urge you to take legal action if necessary. Unless the community can get help from outside, from your office, I have no doubt things will deteriorate rapidly and dramatically. The residents, the citizens will be the big losers.
Sincerely,
M. Jane Murray
Cc: Charles F. Barga, David B. Thompson
