Tuesday, July 20, 2010


Being Stark County's largest city, "as goes Canton, so goes Stark County?"

That's the position of the Stark County Political Report.

So when The Report heard Service Director/Chief-of-Staff Warren Price tell Canton City Council last Monday (see video below) that Canton needed to borrow (he called it an "anticipatory" loan) from itself (using the city's pooled cash resources) in order to beef up Canton's general revenue fund's liquidity (from which city wages are paid) to the tune of $2 million to ensure it was in a position to meet July's payroll, it caused the ears to perk up.

Here is a video of Price explaining the need for Canton City Council to approve the anticipatory loan.

So the SCPR went digging.  Question:  What does this "really" mean?

The "expert" and a very thorough and competent auditor Gary Young is the guy to talk to for the answers.

He says Canton, like many government units across America, is in a financial fix.  Tax revenues, he says, continue to lag (at about $200,000 rate this year compared to much higher [$1.4 million] last year) at a less alarming pace. However, that is not the total problem that Canton faces.

Young cited speculation that Canton's State of Ohio Local Government Fund allocation (because of Ohio's expected Fiscal Year 2012-2013 budgetary shortfall of about $8 billion) for 2011 could be cut at about a 25% rate (of about $5.5 million total for last year) for a possible projected dollar loss of $1.37 million).  But the blow, if it comes, could be softened by the overlap of Ohio's fiscal year budget (July 1 to June 30) with Canton's calendar year budget.  So for 2011, Canton might have to make up for only about $750,000 in cuts.

The Stark County Political Report has heard that for the new budget (2012-13), Ohio is considering dropping local government funding, in terms of it being an entitlement to Ohio's political subdivisions, and converting it into a grant process as a lure to get local governments to consolidate their operations.

If the 2011 local government fund hit materializes, Young says it means a new round of belt tightening for city operations.

As an aside, one wonders if state Representatives Slesnick (D - Canton, Canton Township & part of Perry), Scott Oelslager (R - Jackson, Plain and North Canton, Todd Snitcher (R - the rest of Stark County) and state Senator Kirk Schuring (R - all of Stark County, except for the eastern most part of Stark [Alliance and Minerva]) are paying attention?

The Report believes that Canton cannot expect much help of Slesnick.  The word that the SCPR hears is that Slesnick has a hard time staying the course in committee meetings, and he refuses to answer telephone calls of anyone (including the The Report's) who has tough questions for him.

Back to the anticipatory borrowings.

Canton, two years running now, has had to "borrow" from itself (its pooled cash funds) on a temporary basis.  Ohio law allows statutory cities like Canton to make such transactions, however, the "borrowings" must be repaid within six months.

The current two year cycle is NOT (capitalized for emphasis) the first time Canton has had to do the monetary (cash flow) manipulations.  From 1986 to 1992 Young says that Canton went through a similar "cash flow" borrowing cycle.

Young appeared to The Report to be skittish about Canton's long-term financial picture, but not the recent short-term "anticipatory" loan approval that Canton Council passed at last Monday's meeting.  

In fact, Young says, Canton could - if needed, which he says is not in the cards, use pooled cash resources to handle up to a $12 million "cash flow" six month loan.

It is the continuing but lessened slide in income tax revenues and the possibility of a local government funds hit that worries Young.

Also, at last Monday night's meeting, the SCPR spoke with Robert Torres (economic development director) about the Hercules rehab project.  All he could point to was that the developer continues to look for monies to continue with the project.  Torres said that the fact that the project has about $30 million in tax credits available to investors once the project is completed makes him confident that one day Hercules will be completed.

However one spins the plight of Canton, it is not a pretty picture for either the future of Canton or for Stark County as a whole.

Though Canton is not going belly up tomorrow, it continues to bleed as do Stark County departments of government (even with a sales tax revenue upward spike in June).  Stark County government (if the one-fourth of one percent sales tax is not retained in May, 2011) is facing 30 to 35 percent "across-the-board cuts" beginning in 2012. The SCPR is also hearing that at least one of Stark's townships could be in serious financial trouble.

The SCPR expects Republican Janet Creighton and Democrat Tom Bernabei to be elected as "new" commissioners in November.

On taking office, these two need to spearhead a taskforce to take a look at the total tax revenue situation with an eye towards coaching Stark's political subdivisions to look seriously and expeditiously at consolidations and their concomitant efficiencies.  Moreover, such a taskforce needs to work at developing a long range "united-countywide" economic development plan.

Word last week that Stark State College of Technology is buying 15 acres of land close to the Akron-Canton airport is encouraging news that could play into the economic development planning work that a new set of commissioners needs to embark upon.

Talk has started that the purchase could be the beginning of developing an enhanced Stark County high-tech base.

What Stark's movers and shakers ought to be doing is to push area legislators to advance the notion that Ohio should invest in developing new Ohio high-tech education infrastructure along the lines of the nation of India with its network of  the "best in the world" technical institutes.

A revamped Stark State College of Technology (SSCT) could be a prototype model for a gradually expanding Ohio program. 

Ohio's effort (as an adjunct to Ohio's Third Frontier program) should be integrally tied to actually functioning high-tech companies with a research and development nexus with academia (e.g SSCT), but with clear accountability for the companies to produce marketplace applications in exchange for receiving state government support.

The consummate modus operandi for all who fancy themselves as Stark County leaders should be to change the economic base of our county for the better.

As much as Canton mayor William J. Healy, II has been troubled in effectively conducting his administration, he could be a key person to teaming up with the likes of Bernabei and Creighton (assuming they will be  elected commissioners) to lead Canton, Stark County and all of its political subdivisions out of the economic doldrums.

Why Healy?

Well, there is no doubt that Healy is a very bright guy (graduated from New York University Stern School of Business [MBA]).  His only problem is that he has way too much ego and therefore thinks he can manipulate the world to do his will. 

What he needs to do and has to potential to do, is to use his intellect working with others in a constructive manner where there is something in it for everybody; not just him.

The only question is:  can he work with Bernabei (whom he fired) and Creighton (whom he defeated in an election)?

If he can, a Healy, Bernabei and Creighton grouping (as supplemented by other Stark County visionaries) could be a necleus for getting Canton and all of Stark County on an upward path.

Egos need to be set aside for the good of Canton and, indeed, for the good of all of Stark County.

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