COLUMBUS, OH — Ohio’s state auditor told members of the House Finance Committee he sees “no foreseeable way” East Cleveland gets out of fiscal emergency and suggested bankruptcy may be an option for the city.
But the idea comes with controversy.
“It is not a long-term solution to keep doing what we’re doing and knowing that East Cleveland will be in fiscal emergency and having a review committee into perpetuity,” said Auditor of State Keith Faber.
Most recently, the city was placed under state financial oversight in 2012 when the city’s debt neared $6 million.
Now forecasts predict East Cleveland’s budget hole will grow to $30 million in three years.
The city’s most recent financial recovery plan was rejected by the state oversight committee, citing, among other concerns, the city’s failure to explain how it will pay off tens of millions of dollars it owes in judgments stemming from police misconduct cases.
Now Faber is calling on lawmakers to work with his office to come up with some kind of fix for East Cleveland’s finances.
“Maybe the solution is that the legislature authorizes East Cleveland to go into bankruptcy under the federal statue and clear off its liabilities and re-set the table so that the people of East Cleveland can talk about a future not having to pay for past mistakes,” said Faber.
But the auditor’s words came as a surprise to State Representative Juanita Brent, whose district includes East Cleveland.
“I believe it should be a concern of the state, but we need help, not humiliation,” said Brent. “And I feel like his comments were very humiliating.”
Brent believes now is not the time for any big decisions about East Cleveland’s future.
The city’s mayor is now suspended and facing trial on felony corruption charges.
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In the meantime, it’s not clear who will take over as acting mayor.
Brent worries about what municipal bankruptcy would mean to the city.
The auditor’s office said it’s never happened in Ohio.
“Does it still retain its seat as being a city or does it have to be submerged into other communities?” said Brent.
The lawmaker said once a new mayor is decided; she wants to see local and state leaders sit down together to figure out how to support the city.
“No one in this state should just automatically feel like they need to give up on East Cleveland because the people of East Cleveland have not given up on themselves,” said Brent.
