Facing $25.1 million deficit, Cincinnati city manager asks departments for cuts

Posted at 11:51 AM, Feb 22, 2017

CINCINNATI -- Most city departments are being asked to find 10 percent cuts to deal with a projected $25.1 million deficit next fiscal year, according to a memo from City Manager Harry Black.

Police and fire would be spared, slightly: They're being asked for 3 percent cuts.

Income taxes aren't as high as hoped, Black wrote, which makes up the bulk of the general fund deficit at $14.7 million. Income tax revenue had been projected to grow 5.6 percent in fiscal year 2018; that's been cut more than half, to 2.3 percent.

This year's income taxes aren't coming in as high as expected either, city spokesman Rocky Merz said.

The news of cuts comes just six months after Mayor John Cranley pushed through generous cost-of-living increases for city employees; for hundreds of workers, those guaranteed raises are on top of pay hikes they earn for doing a good job.

Cranley pointed out many employees, particularly police officers and firefighters, were maxed out in their pay scale so they'd not seen a raise during and immediately after the Great Recession.

The raises are expected to cost about $9 million next fiscal year, and $7.3 million the year after that.

Typically, the city manager uses a combination of cuts from various departments to achieve a balanced budget -- in other words, Wednesday's news doesn't necessarily mean departments will see a 10 percent reduction.

This year's shortfall is nearly double the amount Cincinnati faced heading into its last budget cycle: Fiscal year 2017 had a $13.9 million deficit, according to budget director Chris Bigham. The year before, the shortfall was just $3.8 million.

Black already called for a hiring freeze in November and is planning to move payments for some bonds out of the general fund. The city uses a variety of funds to pay for its infrastructure and operations; the general fund is used for a wide variety of expenses, while other funds are more restricted. For example, money collected from water and sewer bills is restricted to pay for only those utilities' needs.

In a statement released through his spokeswoman, Holly Stutz Smith, Cranley said he was "confident" the city would achieve a structurally-balanced budget.

"By reprioritizing basic services, we eliminated past deficits and will approach this budget in the same way," he said. "We were able to overcome these gaps and still increase the number of police on the street, solve a pension crisis, end brownouts and upgrade our credit rating."

Rob Richardson Jr., who faces Cranley and Councilwoman Yvette Simpson in the mayoral primary May 2, criticized both his opponents for what he called a "total lack of leadership."

“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," Richardson said via a statement from his campaign manager, Daniel O'Connor.

Simpson said that she had not yet met with the budget director, but will look for ways to decrease the deficit without layoffs. 

Black expects to give a structurally balanced budget to Cranley on May 17, Merz said.