Auditor wants Ohio city placed in receivership

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(The Center Square) – State Auditor Keith Faber wants a small Cleveland suburb placed in emergency receivership to fix longstanding financial issues.

A new law that takes effect Tuesday allows Faber to ask Ohio Attorney General Dave Yost to start legal proceedings to appoint a receiver for East Cleveland, a suburb that has faced a fiscal emergency for nearly four decades.

“East Cleveland has operated in a state of fiscal emergency for most of the last 40 years, and there has been no meaningful progress to deal with the ongoing problems,” Faber said Monday at a news conference. “This is the only viable option left to protect public resources that have been mismanaged for way too long.”

The state auditor can declare fiscal emergencies for communities that default on debt or have large deficit balances. If that happens, those communities come under oversight of a planning and supervision commission.

East Cleveland has been in a fiscal emergency for almost 13 years. It also operated under the same emergency from 1988 to 2006.

Faber said the city had operating deficits in 10 of its budgeted funds and was holding bills because it did not have the money to pay them.

The city has also not made payments on lawsuit settlements.

An appointed receiver would be able to put in place cost-saving measures, enforce a financial recovery plan, and take other actions necessary.

“It is time for the residents of East Cleveland to have a path forward out of fiscal emergency and to financial stability,” Faber said. “As Detroit proved, there are ways to deal with financial distress and move toward a prosperous, stable financial future.”

East Cleveland’s population has been on the decline over the past 35 years. From a high of nearly 35,000 residents in 1990, the current population is a little more than 13,000 people.