Sometimes we hate it when we’re right.
Not long ago, as the COVID-19 lockdown began its stranglehold here in the Swamp, we predicted it would ravage City coffers. Most of the City of Toledo’s general fund budget comes from income tax revenue. Income tax comes from, well, income. Income assumes employment.
It therefore wasn’t difficult to foresee that mass layoffs and unemployment from COVID-induced shutdowns would reduce City revenue to a trickle. Add in the fact that the April fifteenth deadline to file twenty nineteen tax returns, which would have injected some new life into that moribund revenue stream, has been postponed until July. All the rosy projections from early twenty twenty have gone a-glimmerin’.
What was less predictable was what the Kapszukiewicz administration and Toledo City Council would do about it. The budget was passed in early March, amid a decade-long economic expansion and record job growth. It was based on assumptions that income tax revenue would continue its rise. A mere two weeks later, the bottom dropped out.
This free fall was very different from the Great Recession of recent memory. The loss of revenue in twenty oh nine and twenty ten came as a months-long slide into oblivion. Never before has a budget tanked in the blink of an eye.
So what did our elected officials do to quickly correct the budget as it became clear it was built on faulty assumptions?
In a word, nada.
The vision thing
They waited a full, long month to see what should have been obvious, that the budget shortfall would be massive. As in, unprecedentedly massive. In twenty ten, Mayor-elect Mike Bell inherited a budget shortfall estimated to be north of forty million. Now Wade projects a shortfall by the end of twenty twenty-one that could approach a cool fifty mill.
That’s no chump change. Bell and Council had to fight and wrangle and scrape and conjure to craft a budget that cut tens of millions of dollars. Now Wade and Council have wasted a good month into the new budget, with no real belt-tightening plans to speak of.
We are reminded of twenty oh nine, when the budget first began its descent in the Great Recession. That year, Council passed the budget in early January, then the economy went south, Jeep went on shutdown, and GM went bankrupt. Yet all through the year, as He Who Shall Not Be Named fussed and fumed and furloughed city workers, not enough got done to balance the budget. The City ended the year a good eight mill in the red, ;leading to the massive shortfall of oh ten.
Deja vu all over again. The budget is in the toilet. Wade has belatedly put over three hundred city workers on a thirty-day furlough. Nearly one-third of them are the Department of Public Utilities workers that do the on-the-street day-to-day work of the City. And aren’t paid particularly well. Oh, and he furloughed exactly one, that’s right, one member of his well-paid personal staff from the twenty-second floor of One Guv Center.
The furloughs will certainly hurt city services. These workers are the ones you see providing services every day. Well, except for the poor solitary soul deemed nonessential on twenty-two. That shouldn’t make much of a difference.
Fear the reaper
While these short-term furloughs will help stanch the bleeding, they won’t correct a budget in free fall. What comes next? Every day the budget goes farther and farther into the red.
Will the “furloughs” be made permanent? Will Wade and Council come up with more creative ways to balance the budget without gutting public services? Will Wade get on a riding mower to cut grass in city parks, like HWSNBN did in oh nine?
The grim reaper has come for the budget. Will City leaders rise to the challenge and make the tough decisions to fend off the worst?
Ya better hope so. And ya better hope so fast.