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Audit shows Lorain's 2016 woes

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The year 2016 proved to be a tough one financially for the city of Lorain, evident in a report released Wednesday by the state auditor’s office that looks at fiscal year 2016.

The report examines the financial health of the city based on 17 indicators using data from that year. In it, Lorain showed a high risk for fiscal stress in 10 of the 17 areas. With glaring red type throughout the report, it leaves an impression of imminent trouble for the city.

But Mayor Chase Ritenauer said Lorain is through the worst of it, and he said the report shows how the city was faring through the thick of its financial comeback.

“It should be first noted that Lorain has been removed from fiscal watch, but what you see is that the situation is tenuous,” he said. “We have been out of fiscal watch for four years, but we have not completely gotten over the hump.”

In the statewide release of information, state Auditor Dave Yost said the reports can provide communities and counties with advance warning of looming financial difficulties, “so they can take steps to halt and reverse these trends,” he said.

Not alone

Lorain is not the only city with fiscal worries.

Nine Ohio cities showed signs of financial stress for fiscal year 2016, including Akron, Canton, East Cleveland, Girard, Maple Heights, Norwood, Fostoria and Parma Heights. Elyria’s report put it in a group of 13 cities that are one indicator away from facing an elevated state of fiscal stress.

“Our cities and counties are generally well-managed,” Yost said. “Unfortunately, those leaders sometimes are challenged by financial factors beyond their control: A major employer downsizing or relocating, or reductions in federal or state funding. They’re working hard to be good financial stewards, but it’s clear there is elevated financial stress in many of our local governments.”

The report compares how much money cities have coming in and how much is going out, with an eye toward multiyear trends. Dips in general fund cash balances, spending ratios, revenue projections, the depreciation of capital assets and total debt are all examined in the report.

A useful look back

The report is not a current look at a municipality’s financial picture. Rather, it is a retrospective view of fiscal year 2016 based on the completed audit for that year. State auditors will complete the 2017 audit in 2018 and release a report a year from now.

Ritenauer said he still sees the document as a valuable tool in explaining the complexities of managing a multimillion-dollar budget and dealing with unforeseeable changes in funding.

“We are certainly improving. These are key indicators that can show cities on the precipice of fiscal watch or fiscal emergency. For us, this is based on 2016,” he said. “This year, we have completely eliminated the deficit and are working on a fund balance. If you look at it a year from now with what we have been able to do with the current budget, you will see a change. For us, 2015 and 2016 was a time when the steel mills were idling and we were laying off firefighters. We passed a new levy, but that didn’t go into effect until this year. Any improvements we made in 2017 are not reflected in this report.”

When asked how residents should view this document, Ritenauer said with a sense of optimism and with an eye toward the gubernatorial election for next year.

“This obviously shows that local government needs funding to operate,” he said. “This shows that a lot of cities are struggling under cuts from the state to the local government fund, repealing the estate tax — time and time again this state has continued to take sources from local government. … If that trend continues, you will see a continued trend of communities struggling with budgets, having to make cuts and proposing tax increases.”

Contact Lisa Roberson at 329-7121 or lroberson@chroniclet.com. Follow her on Twitter @LisaRobersonCT.

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