By John Kiesewetter
Enquirer staff writer

COMMISSION MEMBERS

Under Ohio law, the seven-person Financial Planning and Supervision Commission to direct Monroe's fiscal recovery will consist of: • A representative for Ohio Treasurer Joseph Deters. • A representative from the Ohio Budget and Management Office. • Mayor Robert Routson • Vice Mayor Steven Campbell • Three residents appointed by the governor from five names submitted by the mayor.

OTHERS LABELED

Monroe joins two Warren County villages - Harvesyburg and Corwin - in fiscal emergency in Southwestern Ohio. Norwood, which faces a $2.6 million year-end deficit, has asked the state to declare a fiscal emergency. It was in fiscal emergency 1980-82. Two other Hamilton County suburbs have emerged from the process: Lincoln Heights (1981-87) and Elmwood Place (1984-86).

MONROE - Citing a $6.2-million deficit in 11 city funds, Ohio Auditor Betty Montgomery declared a fiscal emergency Thursday for this Butler County city.

The news came as no surprise to city officials, who had asked the state in November to look at the books and determine if a fiscal emergency was warranted.

"From what we saw they were looking at, we always assumed the worst," said City Manager Bill Brock.

But what caught Brock and Finance Director Jay Stewart off guard was the $6.2 million amount, based on figures through April 30.

City officials said the actual red ink is closer to the $1.5 million deficit as of Dec. 31. The higher April figure includes $3.4 million in open "blanket" purchase orders for money earmarked - but not all spent - this year, Brock said.

Under Ohio law, Gov. Bob Taft will appoint a seven-person Financial Planning and Supervision Commission comprising state and local representatives.

It will have 120 days to devise a recovery plan.

The commission also has broad authority to review all city revenue and expenses; require monthly financial reports, and make recommendations for cost reductions or revenue increases to meet the financial plan, said Joe Case, public affairs director for Montgomery.

City Council first learned early last year about negative fund balances over a three-year period ending in 2002.

After the resignations of City Manager Donald Whitman and Finance Director David Collins, Brock and Stewart recommended sweeping budget cuts, including elimination of street paving and other improvements.

As a result, Monroe has a $3 million cash reserve, Brock said.

"The state already sees we're going in the right direction," said Mayor Robert Routson, who will serve on the commission with Vice Mayor Steven Campbell.

But residents of this city along Iinterstate 75, halfway between Cincinnati and Dayton, should expect the belt-tightening to continue for some time, Brock said.

"The (state) fiscal analysis ... clearly shows that the need to eliminate the negative fund balances takes precedence over all other needs of this growing city," said Brock, the former city engineer named city manager in February.

Brock has repeatedly said that Monroe had an auditing problem, not a cash problem.

The city spent money from restricted funds for other purposes, and must repay those accounts, he said.

The deficits were from construction debts for the new city hall, two firehouses and city garage built since Monroe became a city in 1995, Stewart said.

"We are paying our bills, and we've built up a cash reserve of $3 million. We're making payroll. We're operating as we should be. We just need more cash reserves to make up for the negative fund balances," Brock said.

One of the first steps will be to close the blanket purchase orders, and require employees to obtain a purchase order for each expenditure, he said.

Tuesday, council took another step to help bail out the city. It put a 50 percent income tax increase - narrowly defeated by voters on August 3 - back on the November ballot.

Increasing the earnings tax from 1 percent to 1.5 percent would generate about $1.5 million, Routson said.

Monroe resident Bob Youtsler says council faces some tough decisions.

"We're growing so fast, we needed that tax increase, without being in a fiscal emergency," Youtsler said.

E-mail jkiesewetter@enquirer.com