City manager warns of 'very tough' budget, with looming state and federal cuts, but says no layoffs

As Cincinnati braces for state and federal funding cuts and tries to solve its own $25 million shortfall, Cincinnati City Manager Harry Black is preparing to unveil one of the city’s leanest budgets in years. 

“The budget that I intend to submit to the mayor … will probably be viewed as the toughest budget that the city has done in several years,” Black said. “It will require some very hard decisions.”

The budget battle may be especially brutal this year because of the upcoming City Council and mayoral elections.

Black has been sounding the warning bell for months, urging leaders to prepare for the coming cuts.

In March he asked city department heads to come up with 10 percent cuts, except for police and fire, which were asked to cut by 3 percent. They suggested possibly closing four pools, three recreation centers and a health clinic.

Then last week, Black warned local nonprofits to tighten their spending, citing the “extreme” and “drastic” cuts to federal funding that President Donald Trump is proposing.

The president wants to pull federal dollars from domestic programs and move them to Homeland Security and the Department of Defense. He asked for huge cuts to the U.S. Department of Housing and Urban Development, which could directly impact the city.

Last year, for example, Cincinnati received nearly $13 million from HUD’s Community Development Block Grant. Trump’s budget plan would eliminate it entirely.

The city gets a big chunk of its budget from the federal government: $55.3 million. That’s the equivalent of 192 full-time employees.

“We’re dealing with our own fiscal issues here in Cincinnati, and we’re trying to track federal fiscal activity -- which may or may not impact us here in Cincinnati -- and we’re also tracking the state,” Black said.

Cincinnati also stands to lose $1.2 million in state funding this year if the legislature adopts Gov. John Kasich’s proposed changes to the way the state distributes money to local governments.

And the city is facing its own $25 million budget deficit because the earnings tax, the city's main source of revenue, is falling short of projections.

“Right at this moment we’re not laying off people, we’re not closing facilities, we’re not ending services,” Black said. “But it still will be a very tough budget.”

Layoffs at nonprofits?

When Jock Pitts, president and CEO of People Working Cooperatively, got the city’s letter warning him about possible federal funding cuts and urging him to be “conservative in all non-emergency spending,” he was confused.

“Our service is emergency repairs," Pitts said. "It’s all emergency."

His nonprofit helps low-income, elderly and disabled homeowners with emergency repairs such as fixing water pipes or a broken furnace. It helps 10,000 people in 20 counties, including 3,000 to 4,000 people each year in the city of Cincinnati.

And 22 percent of its budget – or $2.67 million – comes from federal Community Block Development Grant money.

“These are the most important funding dollars we have,” Pitts said. “It’s of tremendous concern to me.”

If Congress votes to eliminate the block grants, as Trump has proposed, it would mean layoffs for some of PWC’s 120 employees, Pitts said.

“As a nonprofit, we run on a very thin margin,” Pitts said, noting the agency receives 42 percent of its funding from the federal government. 

Also at risk is Strategies to End Homelessness, which receives more than $18 million in grants from the HOME Investment Partnerships Program, Emergency Solutions Grant, and Housing Opportunities for Persons with HIV/AIDS, as well as block grant money.

“That is literally the money that seven homeless shelters use to pay their electric bills and pay water bills,” said Kevin Finn, president and CEO of Strategies to End Homelessness.

Cranley’s Hand-Up Initiative, a job training and placement program aimed at curbing poverty, also got $1.38 million in block grant money in 2016.

"It's a huge threat," Cranley said. "Our Hand Up Initiative is funded by CBDG dollars. It would be wiped out."

Cranley said he's working with the U.S. Conference of Mayors and several other groups to lobby against the proposal.

"I'd like to believe Congress isn't going to phase out Community Development Block Grants," he said. "But the fact that it's even on the table is scary."

HUD money is also used to fund employee salaries at the city’s Department of Community and Economic Development, Buildings and Inspections and Planning departments.

“These are real people who are in real positions and we would do everything we could in a humane way to try to lessen the impact,” Black said, if federal funding was cut. “We’ve developed some preliminary scenarios in terms of how we would handle personnel impacts. But it would be an unfortunate and impactful situation.”

When Congress returns from recess on Monday, it has four days to reach a budget agreement until government funding runs out April 28.

Meanwhile Black will present the city’s budget to Cranley by May 18. Then the mayor and council will make changes before a final vote by July 1.

Lucy May and Joe Rosemeyer contributed to this report. 

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