By Steve Kemme
Enquirer staff writer

NORWOOD - The city's financial situation has become so dire that city employees will receive letters soon warning them they might miss all or part of a paycheck within the next month.

"It's inevitable that we're going to run out of money to pay salaries," said Councilman Joe Sanker, chairman of the Finance Committee. "Somewhere down the road, there will be an interruption in payroll."

City officials discussed the financial problems Tuesday at City Council's first regular meeting since the crushing defeat last week of the city's 14-mill levy proposal.

The levy defeat leaves the city struggling with a projected $2.6 million year-end deficit and a cash-flow problem that threatens city employees' paychecks.

Norwood officials said Tuesday they want the Ohio Auditor's Office to declare the city in a state of fiscal emergency as soon as possible to take advantage of state loans.

The state doesn't declare a community to be in a state of emergency until the community misses a payroll or a bill payment by 30 days. Then, the state conducts a special audit.

The whole process normally takes several months.

But Norwood officials say they will be encouraging the state to act much more quickly.

The faster the Ohio Auditor's Office declares Norwood to be in a state of fiscal emergency, the faster state loans would be available to the city, said Tim Molony, Norwood treasurer. "That may be our best option," he said. "We're trying to get through this as least painfully as possible."

"I agree with the treasurer," Mayor Tom Williams said. "The sooner, the better."

Norwood will be able to pay its employees Friday, but the city needs a quick infusion of cash, Molony said.

"It's going to be a constant balancing act between making our payroll and paying our vendors and making both groups happy," he said.

If a fiscal emergency is declared, a commission of officials from Norwood and the Ohio Auditor's Office would devise a two-year plan to put the city back in the black. City Council and then a Hamilton County Common Pleas judge would have to approve the plan before it could take effect.

The plan could include employee layoffs, service reduction and a new levy.

E-mail skemme@enquirer.com