PHOTO BY CHUCK HOVEN

Tuesday, February 13, 2024; Estabrook Recreation Center, 4125 Fulton Road, Ward 7 City Council Representative Stephanie Howse-Jones interacts with residents at a meeting hosted by some City Council members to talk with residents about the City of Cleveland Budget.

PHOTO BY CHUCK HOVEN

Tuesday, February 13, 2024; Estabrook Recreation Center, 4125 Fulton Road: (L-R) Ward 13 City Council Member Kris Harsh, Ward 14 Council Member Jasmin Santana, and Ward 15 Council Member Jenny Spencer. (Also, in attendance but not in the photo, were Ward 7 City Council Member Stephanie Howse-Jones and Ward 12 Council Member Rebecca Maurer) At the meeting titled: What’s in Your Wallet? — Clevelanders were invited to come share their feedback and suggestions on the City’s proposed 2024 budget. The meeting was hosted by members of Cleveland City Council.

City Council members listen to residents’ concerns about Cleveland’s budget

by Chuck Hoven

                  (Plain Press March 2024) In February, Cleveland City Council members hosted a series of meetings offering Cleveland residents an opportunity to give feedback on the City of Cleveland’s proposed budget for its next fiscal year.

Council members presented residents with a timeline which showed the Mayor’s Estimate of the budget being submitted to Cleveland City Council on February 1^st. Council hearings on the budget occurring in the month of February and City Council’s adjustments to the budget made to the budget in the month of March. The timeline noted City Council must pass a budget by April 1^st.

NEWS ANALYSIS

Five City Council members attended one such hearing held at Estabrook Recreation Center in the Old Brooklyn neighborhood on February 13^th to dialogue with and listen to the concerns of a small group of residents and this reporter from the Plain Press.

City Council members participating in the session were: Ward 7 Council Member Stephanie Howse-Jones, Ward 12 Council Member Rebecca Maurer, Ward 13 Council Member Kris Harsh, Ward 14 Council Member Jasmin Santana, and Ward 15 Council Member Jenny Spencer.

                  Council members shared some figures from the Mayor’s Budget Estimate including pie charts with sources of estimated revenue and expenditures.

                  The revenue estimates predicted $779,306,140 in total revenue in the 2024 fiscal year. The largest percentage of the revenue is expected to come from income tax, with a contribution of $492,851,495 or 63.2% of the projected revenue. Property taxes are expected to contribute another $46,102,745 or 5.9% of the estimated revenue. The remaining 30.9% of the revenue is expected to come from a variety of sources including admission tax, licenses and permits, miscellaneous, investment income, local government fund, charges for services and fines, grant revenue, other shared revenue, transfers in, and other taxes.

                  The expenditures in the Mayor’s Budget Estimate totaled $778,689,000 for the entire 2024 operating budget. The total number of employees supported by the budget was listed at 4,600.

The Executive Branch accounted for $721,348,621 of that amount representing 92.6% of the operating budget. According to information provided by the City Council members, this includes salaries and benefits for 4,113 people.

The Judicial Branch, which includes Municipal Court, the Clerk of Courts and the Housing Court has a proposed budget of $48,273,787 or 6.2% of the operating budget. The number of employees is estimated at 426 people.

Cleveland City Council’s proposed budget was listed at $9,066,769 or 1.2% of the operating budget. The number of employees in the legislative branch is listed at 61.

The largest part of the entire City of Cleveland proposed budget is devoted to Public Safety which amounts to $400,719,587 or 51.5% of the total budget. The remainder of the executive branch’s proposed funding includes categories such as Public Works, Non-Departmental, General Government, Finance, Law, Public Health, Building & Housing, Human Resources, Economic Development, Community Development and Aging.

The discussion on the budget included questions about equity and fairness in the distribution of funds and decisions made by Cleveland City Council.

A resident of Ward 1 said she did not see how residents in her neighborhood were benefiting from the City of Cleveland’s spending. Council Member Rebecca Maurer asked her what benefits would look like to her. The resident noted that other areas of the city were getting improvements they didn’t need, while her neighborhood was being neglected.

Council people talked about some other means of paying for neighborhood improvements including bonds for capital projects and revenue from casinos. Council members say that each City Council member receives about $93,000 a year in casino revenue to distribute. This represents 15% of the casino revenue that the City of Cleveland receives. They said the City Administration receives the other 85% of the revenue. Residents asked if City Council could reverse those amounts and allocate 85% to City Council and 15% to the City Administration.

The Plain Press raised an issue concerning a broken promise made by the City of Cleveland and supported by legislation passed in 1995.

At the time, City of Cleveland leaders went down state and secured legislation from the State of Ohio to exempt the new Brown’s stadium from property taxes. They also promised that the Cleveland Municipal School System would be made whole and not lose the revenue it would have received if the stadium was required to pay property tax. They promised the Cleveland schools would receive $2 million per year to fund extracurricular activities to make up for the stadium’s tax exemption, the remainder of the funds could go to either Brown’s stadium repairs or to the City General Fund.

The legislation City Council passed in 1995 to provide the funds increased the admissions tax, the motor vehicle leasing tax and a parking tax. The $2 million per year for the schools would come out of the combined revenue from these three taxes that bring in $20 million or more a year. The promise was kept for about a decade. Then the Jackson Administration reduced the amount to $1 million per year to give the Browns extra money for repairs of the stadium. The Comprehensive Extracurricular Activities Program of the Cleveland Metropolitan School District (CMSD) received a million or less for the remainder of the Jackson administration. The Bibb Administration increased the amount given to the schools to $1.125 million in its current budget proposal. Meanwhile the Brown’s stadium is sitting on millions in unused funds set aside for repairs. Funds that should have gone to Comprehensive Extracurricular Activities Program of the CMSD.

              Council members were thankful for the institutional memory of the promise made to the schools preserved and presented to them at this meeting. Council Member Stephanie Howse-Jones said she was only 14 years old in 1995. Council Member Kris Harsh said he didn’t come to Cleveland until 1998. Council Member Jenny Spencer found the proposed budget of $1.125 million for the Comprehensive Extracurricular Activities Program in the Mayor’s Budget Estimate. Council members promised to investigate the matter.

Council Member Kris Harsh brought up the issue of which neighborhood pay more in taxes than they receive in services. He claimed that only the Downtown and University Circle neighborhoods paid more in taxes than they received in services. Harsh did not provide the source of his data. While both Downtown and University Circle are large employment centers, many of the employees of employers headquartered in those neighborhoods do not work or live there.

For example, while the payroll taxes for the City of Cleveland or the Cleveland Metropolitan School District may be paid from City Hall and the CMSD headquarters on E. 12^th and Superior, the employees may work in various places throughout the city and may live in places throughout the County. The same is true of some of the entities in University Circle. For example, Cleveland Clinic owns and operates Lutheran Hospital and Fairview Hospitals on the West Side of Cleveland. Are those employees included in the numbers for the neighborhoods where they are working, or in the University Circle’s numbers? Also, none of the large government employers pay any property tax. Nor do most of the nonprofit institutions and hospitals in University Circle. Many of the new large residential apartment buildings in Downtown and University Circle also have 15-year property tax abatements.

The meeting also included a discussion of the impact of tax abatements and tax increment financing. State of Ohio enabling legislation allows City governments to engage in these practices. With some minor changes in the past year, Cleveland City Council decided to continue the tax abatement program. It is also weighing a decision to create Tax Increment Financing District that would divert non-school increases in property tax revenue to a special fund that would largely go to infrastructure that would pave the way for large developments planned by the billionaire owners of the Browns and Cavaliers on the Lakefront and Cuyahoga River.

In the discussion concern was expressed that City Council’s decisions on tax abatement have an impact on not only the City of Cleveland’s budget, but also the budgets of the Cleveland Metropolitan School District, Cuyahoga County, the Cleveland Public Library and the Metroparks.

The Cleveland Metropolitan School District is most severely impacted by the tax abatements. The CMSD receives 54.51% of the property tax revenue. New construction is the only local source of revenue increase that the CMSD can benefit from to help offset inflationary costs without passing another tax levy.

While Cleveland City Council has argued in the past that housing coming off tax abatement after 15 years will produce that revenue increase, this has not happened. By the time the housing comes off abatements, Cleveland has lost so many residents and housing units in those 15 years that the increase in property tax revenue projected by the CMSD is only a half of a percent per year. Meanwhile their labor costs go up each year, and health insurance alone rises about 9% each year.

Back in the 1970s the State of Ohio passed House Bill 920 which was later enshrined in the State of Ohio Constitution. The bill will not allow residents to pay more in school taxes for operating purposes unless a tax levy is put before voters. So, when properties are reappraised, the millage is lowered on the individual property tax bills, so residents do not receive an increase in the amount they pay for schools.

For the school system to keep up with inflation it must benefit from new construction, or continuously pass property tax levies. So, every few years the school system cuts programs and lays off employees until it can pass a levy. Revenue from new construction which is supposed to help sustain the school system for longer periods without a levy, is not forthcoming because of tax abatements.

The other entities impacted by both property tax abatements and tax increment financing – both enabled by State of Ohio legislation—are the City of Cleveland (15.16% of the property taxes); Cuyahoga County (19.45% of the property taxes); Cleveland Public Library System (7.51% of the property taxes); and the Metroparks (3.27% of the property taxes).