by Chuck Hoven

     (Plain Press June 2024) Cleveland bears the distinction of having the highest child poverty rate among big cities in the United States. Yet rather than addressing this critical issue, Cleveland politicians continue to prioritize the wants of the wealthy and powerful over the needs of its poorest citizens – Cleveland’s children and their families struggling to make ends meet.

     Some insight into why this continues to be the case in Cleveland was offered by a panel at a recent Ideastream Community Tour titled Wealth and Power in Cleveland. Moderator Jenny Hamel and four panelists talked about who the wealthy and powerful in Cleveland are and offered insight as to why local politicians continue to shower them with public resources, often to the detriment of those who need those resources to help lift their families out of poverty.

NEWS ANALYSIS

     Cleveland’s history is replete with examples of how local politicians reward the wealthy with more resources while depriving the poor of resources or offering minimal resources to address their needs. The current crisis in the Cleveland Metropolitan School District’s budget deficit is one example that illustrates that this pattern of behavior continues today.

     The four panelists participating in the discussion were: Historian at the Western Reserve Historical Society (WRHS) and Case Western Reserve University (CWRU) Professor Dr. John Grabowski; Dr. Ronnie Dunn of the Diversity Institute and Professor of Urban Studies at Cleveland State University; Timothy Tramble, President and Chief Executive Officer of the St. Luke’s Foundation; and Yanela Sims, Ohio State Director and Vice President of Service Employees International Union (SEIU) Local 1.

     Dr. Ronnie Dunn said when he thinks of the wealthy and powerful in Cleveland some prominent names come to mind such as the Ratners, Millers, Haslams, and developers.

     Yanela Sims said she thinks of those who lack wealth and power such as immigrants, blacks, and women.

     John Grabowski said he thinks of the names of some of the families that owned mansions along Euclid Avenue and some members of Cleveland’s Jewish community.

     Timothy Tramble said the wealthy and powerful “have the ability to make mistakes and recover from them.” He said, the wealthy have access to resources to implement their ideas that others don’t have access to. For those without wealth and power, if they do get an opportunity, it is usually a small one and their successes are small. If they fail it is hard to recover from the failure. In summary he said, “wealth gives individuals the opportunity to make mistakes and to execute ideas.”

     Asked why politicians continue to provide public resources to the projects of the wealthy and powerful such as funding sports stadiums rather than using those resources for the education of Cleveland’s children, each panelist offered some insight.

     Tramble of the St. Luke’s Foundation said, the wealthy have the “means and resources to control the narrative and the resources to invest in campaign contributions.”

     Sims of the SEIU noted that political campaigns cost money, and the wealthy can provide funds for campaigns. She said people working two jobs and picking up their children from day care have little time to find out about the issues, or time to vote or get an absentee ballot. She spoke of voter apathy, “if the system is not working for you, why even put in the effort?” she said.

     Grabowski of the WRHS noted how expensive campaigns are now and told the story of how the modern political campaign got started with Clevelander Mark Hanna promoting the presidential campaign of William McKinley. Grabowski said that it was said “Mark Hanna packaged William McKinley like a box of cereal and sold him to the public.”

     Grabowski noted that the last stadium in Cleveland that was privately funded was League Park. We are now pouring public money into stadiums for teams owned by mega millionaires, if not billionaires.

     Dunn of Cleveland State University said perception of political corruption leads to voter apathy and “people lose heart.”

     Speaking of those politicians that have successfully run for Mayor of the City of Cleveland in recent years, Dunn said they have two things in common. “Most mayor’s when running for office have a wealthy benefactor financing their campaign and they have a prominent member of the African American clergy supporting their campaign.”

     This discussion of wealth and power was timely because at the Cleveland Metropolitan School District (CMSD)Board of Education meeting on May 21^st the Board of Education voted to ask the public to support a school levy this fall. The CMSD is projecting huge deficits over the next few years.

     The public narrative being pushed is that the projected deficits are due to the end of the extra federal funding the school district received during the pandemic. The reality is that the federal funding only postponed the deficits that would have occurred earlier without that funding.

     Ohio House Bill 920 passed in 1976 keeps school district taxes at the same amount until a new levy is passed. So even if your property is appraised at a higher amount, the school portion of the property tax will still be based on its value when the last levy was passed. Thus, the only way for a school district to increase local property tax income without a levy is to gain property taxes from new development. However, the City of Cleveland’s administration and Cleveland City Council, despite warnings from community educational advocates, continue a policy that largely benefits developers — offering 15-year tax abatements on new residential development. While City Council did set some minor restrictions on abatements over a certain dollar amount, the loss of revenue due to tax abatements still severely impacts the budget of the Cleveland Metropolitan School District.

     Advocates for tax abatement argue that when the 15 years are up, the CMSD will benefit from when properties come off tax abatements. However, CMSD’s revenue projections indicate less than a one percent growth in local property tax revenue despite properties coming off tax abatement each year. The reality is that Cleveland is losing substantial property wealth each year abandoned houses, residents leaving the city, and property owners seek reductions in property value due to loss of income.

     The other possible source of growth in school revenue is the per pupil allocation from the State of Ohio. However, a school district without growing local tax revenue from new construction finds it hard to compete with charter schools that offer after school programs for children of working parents, or suburban schools that offer smaller class sizes and a plethora of extracurricular activities that the Cleveland schools cannot afford.

     A March 11^th article in the online publication Signal Cleveland by Nick Castel titled “Cash-strapped Cleveland schools lose out on millions from tax abatements” says “between 2017 and 2023, CMSD lost out on a total of $208.1 million” due to tax abatements. The article notes CMSD over that period the loss to the school district averaged $28.8 million a year due to the tax abatements awarded by the City of Cleveland.

     The article also notes the abatements do not include the tax exemptions awarded to the Cleveland stadium and the two Gateway properties which local politicians petitioned the State to allow them to be tax exempt. If they were not exempt from property taxes, these properties would be contributing an additional $12 million in school taxes each year.

     Thus, the real estate developers and the sports team owners are receiving property tax breaks that deprive the CMSD of over $40 million per year in property taxes. The rest of the Cleveland taxpayers end up being asked to make up for that loss in revenue to help the school system avoid massive deficits.

     In the Ideastream Community Tour on Weatlh and Power in Cleveland, CSU Professor Ronnie Dunn said that conditions should be a motivator for Clevelanders to act. “If things get dire enough, people will be motivated enough to rise to change their conditions.”

     Well Clevelanders, things are dire. Our child poverty rate is the highest among all big cities in the United States of America. The Cleveland Metropolitan School District is projecting huge deficits at the same time it is trying to give workers a raise, especially low paid teachers’ aids asking for a living wage.

     While the CMSD has proposed a property tax increase to address its financial woes, that increase, if passed, will hit many low-income property owners hard in Cleveland. Some may no longer be able to afford to stay in their homes. Passing a levy will not only mean the paying the millage called for by the levy, but also paying on the increased value of their property since the lase levy was passed. This can be substantial in neighborhoods that are gentrifying. While the homestead exemption helps with reducing property taxes for some senior citizens and disabled residents, it only applies to the first $26,200 in property value. If a senior citizen bough their house for $18,000 forty years ago, and now the neighborhood has gentrified and the house is valued at over $200,000, even with the homestead exemption on the first $26,200 in value – their property taxes will still be substantial.

     Faced with these dire conditions, what can Clevelanders do? Is there an option that will still provide necessary revenue to the Cleveland schools and still help low-income homeowners remain in their homes in gentrifying neighborhoods? While it is unlikely that the Mayor or City Council members will vote to end tax abatement when developers are major contributors to their campaign coffers, citizens do have another option available to them. With enough signatures, Cleveland citizens can place an issue on the ballot through the referendum process.

     One idea would be a ballot measure calling upon the City of Cleveland to reimburse the Cleveland Metropolitan School District each year for the value of the abatements that the City has granted through its tax abatement policy. As the Signal Cleveland article indicated, this would mean about $28.8 million per year to the CMSD. Cleveland’s Mayor and City Council have argued that the revenue from the payroll taxes gained from new residents more than makes up for the tax abatement. This may be true for the City of Cleveland’s portion of the property tax – but it is selfish of the City politicians not to consider the impact on the other entities that deprive revenue from the property tax. With a citizen referendum requiring that the school system be reimbursed by the City of Cleveland for all abated property taxes, the City of Cleveland will be forced to reevaluate its tax abatement policy and Cleveland’s school children will not be deprived of those resources needed for their education.