SILVERTON
- The city was put on notice Monday that it has until Jan. 10 to come up with a plan to put its financial house in order, or risk a state takeover.
Based on the city's financial crisis, the Ohio auditor's office declared the city on ''fiscal watch'' - a warning that its finances are near fiscal emergency status. The city now has 60 days to develop a recovery plan.
A meeting is scheduled Friday to begin the process.
Silverton narrowly escaped fiscal emergency, Ohio Auditor Jim Petro said. And that possibility still hovers over the city. The auditor's office will begin a new analysis after Dec. 31 to see whether the financial status will change, Mr. Petro said.
Meanwhile, ''we'll be monitoring Silverton on a weekly basis,'' he said. And if at any time the city defaults on payroll 30 consecutive days, or defaults on bonds or notes, it faces a fiscal emergency, he said.
Time to act is right now If that happens, the city would have 120 days to correct the deficit before fiscal emergency is officially declared, the auditor said. Fiscal emergency requires that a financial planning and supervision commission be appointed to take charge and form a plan to balance the budget and avoid future deficits.
The state will provide free advisory and technical support to help the city develop a financial plan, but no cash bailout. The plan will likely include various changes, such as layoffs and reduced or privatized services, Mr. Petro said.
While neither a watch nor an emergency status is good news, at least now the city has a chance to turn things around with minimal state intervention, Mayor James Siegel said.
''I'm determined to keep our city out of state hands,'' Mr. Siegel said. ''There could be money coming in as early as next week to keep us out of the state's hands. We have people working on recommendations to council. I won't say what yet.''
Mr. Petro said the crisis appears to have resulted from a combination of factors, including declining revenues and increasing expenses. The state's financial analysis shows that the city's deficit funds were at $384,000 Dec. 31, 1996, or $211,394 more than allowable for fiscal watch levels, after adjustments for approved transfers. The deficit exceeded levels allowed for fiscal emergency by $119,038 on that date, but by Sept. 30, had dropped to fiscal watch levels.
''I'm confident they can work through this,'' Mr. Petro said. ''But I don't know if they will. That's up to the leadership of the community. The time to act is really right now.''
City Clerk Rob Fredericks has said since early this year that expenditures were exceeding revenues and cuts needed to be made to avoid a potential $200,000 year-end general fund deficit. Council members said he did not show them concise figures or give adequate information to determine the financial status or make decisions on cuts.
The city scraped together funds for the last two payrolls and the one due Friday. After Friday's payroll, the general fund will be about even. But without layoffs, the city will need about $200,000 for the next four payrolls and benefits through Jan. 15, when the next major influx of cash is expected. Until then, revenues are expected to be about $60,000. And the city has $60,000 in debts to various vendors, a figure that will grow before year's end, Mr. Fredericks said.
''I'm not sure the auditor's report is bad news,'' Mr. Fredericks said. ''Finally someone in higher authority is acknowledging there is a problem, so we can put it to rest. And instead of nitpicking on spread sheets, we can move forward, put together some financial plan to make sure we . . . get out of debt.''
