Sean Kalin Stipe guest blog: The Illusion of Fiscal Responsibility in Lorain and the role of Council in 2010

Editor’s note: Sean Kalin Stipe is a Libertarian candidate for an at-large position on Lorain City Council. Early voting has already begun, with election day set for November 3rd.  Buckeye RINO endorses Stipe for Lorain City Council at-Large.

A quick read of the Morning Journal gives the impression that we are having some financial problems, but it’s only to the tune of $690,000. Our Mayor will quickly pass the blame to funding from the State of Ohio being cut $400,000 from last year. When the budget was presented to council in March, Lorain was in bad shape; heck, the whole country was, so a major cut in state funding should have been anticipated.

This still leaves another $290,000 that is going to the anticipated end of year budget deficit. Blame it on the streets. The have spent $209,000 more than budgeted, and the improvements to our streets shows that it was well spent (sarcasm). The question that hangs out there is who is allowing department to overspend their budget. That falls right in the lap of out chief administrator, the Mayor of Lorain. Remember that council already approved the spending levels for the year, but that doesn’t seem to matter anymore.

There has to be some good guys that are saving money this year. The parks department should truly be commended for their efforts. One the Journal’s list of who has save the most is, of course, the Mayor who is $938 under budget. “Ata boy!” But wait, how did he get the numbers to show this “savings?” These numbers, provided for this week’s council meeting shows that the Mayor’s salary for the last four months of the year are not included. That’s $14,086 per month. Now that department is over by $55,406 dollars at the end of year.

This tricky book-keeping is repeated in most departments. The expense sheets provided to the public has a lot of blacked out sections, but it appears that no one got paid in September or will be getting paid in October. Then there is a lump sum payment in November. For those on city council who actually read their packets, they must figure out how this shell game is being played.

So how do we figure out what the projected deficit of Lorain actually is. It certainly isn’t going to be just $690,000. Here is how fast that number changes:

  • -$ 690,000 2009 expenses over revenue as reported
  • -$1,500,000 2008 year end deficit
  • -$734,000 “Shoe Boxed” bills
  • -$500,000 Utility department money that was borrowed (transferred aka “advanced”) in 2008
  • -$2,400,000 Debt service payment due at the end of 2009
  • -$2,000,000 Borrowed from Water department
  • -$2,000,000 Borrowed from Water Pollution Control department
  • -$690,000.00

TOTAL 2009 Year End Deficit (simplified version)

  • -$9,824,000.00

This leads to what role the Lorain City Council members that are being elected in November is actually going to be. According to state law, it’s not going to be much. In 2002, Lorain was placed on “fiscal watch” and can not be removed until the general fund deficit is eliminated. Lorain will enter “fiscal emergency” if one the following happens; default on a debt, lack of funds for payroll, “shoe boxed” bills exceed 30 days, or the year end deficit is 1/6 of yearly revenues.

Projected general fund revenue for 2009 (as of 9/24/09) is $35,658,000. That makes the danger number just under $6,000,000 and as you can see from above, we exceed that by nearly $4,000,000. There is still a debated legal opinion from ex-Law Director Provenza about the fact that we can “advance” monies from the Utilities department. The significant fee increases to our water and sewer bills earlier this year sure look like a back door tax at this point.

Should we end up in an emergency, the City of Lorain will be run by a financial planning and supervision commission. This includes the treasurer of state, the director of budget and management, the mayor, the council president and finally 3 others that come from a list of five people appointed by the mayor and council president. Those people can not have held public office in the last 5 years. The governor picks the three. All members of this commission are immune from any actions they take.

So unless a rabbit is pulled from a hat, this will be the new government of Lorain. The magic trick being shown right now is hiding this until after the November election.

14 Responses to “Sean Kalin Stipe guest blog: The Illusion of Fiscal Responsibility in Lorain and the role of Council in 2010”

  1. kendra Says:

    So Kalin – you continue to open my eyes (as does Joyce Early), and those of fellow Lorainites I share information with. What I’m missing in the mass of information is: when do we (the ordinary citizens of Lorain) have a say in what happens. Is November the ONLY time our voices are heard??? What are recourse do we have???

  2. Ladalang Says:

    It gets even better, look what they have in store for us tonight, debt, with a side of debt with a small debt salad and a cup of debt soup. And 20 years from now when are kids are cursing this administration for its fiscal irresponsibility they’ll be paying our debt on top of their debt.

    http://www.joyceearly.com/forum/viewtopic.php?f=3&t=6

    • buckeyerino Says:

      You are so correct. The Chronicle-Telegram posted this report, with Mayor Krasienko putting so much spin on this bond proposal that it will drill the last hole needed into an already leaky bucket to make certain that Lorain’s finances are drained away forever. Where does the city get the money to pay back the bonds with interest? The math just doesn’t add up.

      • Ladalang Says:

        How about the clever way it says this bond or borrowing of 5 million will get rid of the debt. I almost spit out my coffee. We will have a quarter million dollar increase in our debt payment next year and this magically got rid of our debt? How? It’s total double speak, this increases out debt. How can borrowing more get rid of debt? And the fact that both papers went with the spin rather than opening this thing wide and telling the truth shows you why the citizens have no idea what their elected officials are doing. They made it sound like it was a good thing for the city. We just passed our debt on to the next generation; sickening!

      • buckeyerino Says:

        This doesn’t quite succeed in passing the debt to the next generation, as they’re painting themselves into a corner with this move. This means that this generation is going to be smacked over the head with it as well as the next generation. The time to pay the piper is coming up very, very soon.

  3. kendra Says:

    I couldn’t bring myself to go tonight (somewhat ashamed of myself)….I don’t want o stick my head in the sand again…but it’s all getting a little overwhelming at this point. Change cannot come soon enough!!

  4. Dennis Says:

    I couldn’t bring myself not to go…the ordinary citizens of Lorain need to wake up and get more involved, it’s the ones with their head in the sand that are too busy to care about what goes on in our city. It’s all very disappointing what is going on with our city…I feel a change is coming but not without a fight, we have to continue fighting until we can change the way “THEY” are doing business in our city!

    • kendra Says:

      This is the first I’ve missed in some time. Not actually putting my head in the sand….I’m simply almost speechless – incredulous – appalled and angry. Need to get all those emotions in check for the moment. I’ll be at the finance & claims meeting….

  5. Sean Stipe Says:

    “So unless a rabbit is pulled from a hat” was a bit prophetic. I knew something was in the works codename: “Health Insurance Bond” when I wrote this. It was an hour later that the plan was put forward. Both issues will be discussed in what will be a marathon Finance and Claims Committee meeting on Monday. If they voted on it yesterday, it would have been defeated 9-2. Let’s see who drinks the Kool-Aide. Even better, lets see who on council sticks around for the whole meeting.

  6. Sean Stipe Says:

    Update from Moody’s credit rating:

    Current outstanding bonds of 50.9 million dollars

    Rating of Baa2 with a negative outlook.

  7. kalinstipe Says:

    SURPRISE: COUNCIL FINANCE COMMITTEE MEETING CANCELED !!!!!

    As I said in my article: “The magic trick being shown right now is hiding this until after the November election.”

    Will you be fooled by the trick?

  8. 2009 Buckeye RINO endorsement recap megapost « Buckeye RINO Says:

    […] Lorain City Council at-Large, Buckeye RINO endorses Sean Kalin Stipe, who has correctly predicted that Lorain’s fiscal crash is being masked over until after […]

  9. Sean Kalin Stipe guest blog: Libertarians on the verge of something big in Lorain County « Buckeye RINO Says:

    […] of something big in Lorain County November 26, 2010 — buckeyerino Editor’s note: Sean Kalin Stipe, Lorain resident, former (maybe future?) Libertarian candidate for Lorain City Coun…, finds some good news for Lorain County’s Libertarians after crunching the election […]

  10. From the desk of Sean Kalin Stipe: Pending Ohio ballot issues « Buckeye RINO Says:

    […] note:  Sean Kalin Stipe is a Lorain resident.  In 2009, Stipe ran for Lorain City Council.  More recently, he’s written a guest blog article about the rise of the Libertarian Party […]


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