By Gregory Korte
Enquirer staff writer

Cincinnati will freeze hiring, ban nonessential city employee travel and delay a police recruit class in an effort to save $7.8 million.

But cost-cutting alone won't solve the city's growing budget crisis, officials said, so they're resorting to something they've never done before - a one-time-only amnesty for taxpayers cheating on the city's earnings tax.

The budgetary measures, announced Thursday in response to four months of low income-tax collections, are the most drastic midyear cuts the city has made in decades.

"We're taking these serious measures because our budget situation is very serious," said City Manager Valerie Lemmie at a morning news conference outside the city treasurer's office.

To compensate for the delayed fall police recruit class - which will be forced back from September to December in an effort to save $400,000 - Police Chief Tom Streicher said he will reassign 25 officers now holding desk jobs to street duty.

The size of the December class will also be increased, he said.

Mayor Charlie Luken said he would urge City Council to rescind what he called "council add-ons" to the 2004 budget.

Those politically popular programs include the $1.5 million Clean and Safe Neighborhood Fund, sponsored by Councilman David Pepper, and a $50,000 minority tourism initiative spearheaded by Vice Mayor Alicia Reece.

Those efforts could meet resistance from City Council.

"We've talked a lot in the last couple of years about community police partnerships. That won't work if people who have ideas to make their neighborhoods safer can't make them happen, and that's what the Clean and Safe Neighborhood Fund does," Pepper said.

But Pepper said most of the measures make sense.

"I haven't seen the fine print, but we have a constitutional requirement to balance the budget," said Pepper, a 2005 candidate for mayor.

Earnings tax collections appeared to be holding on in the first quarter. But since then, the figures have been dropping, and the city has collected $715,000 less in earnings tax than at this time last year. City Council's spending plan assumed that income taxes would grow 4 percent this year.

All told, the earnings tax brings in $217 million a year. Most of that goes to the general fund - which pays for operating expenses such as police, fire and garbage - where the earnings tax makes up 60 percent of the money coming in.

The income tax amnesty hopes to increase tax collections by $500,000 by getting people with unreported income to come clean. The amnesty will last through Nov. 15, after which the city promises to be more aggressive in its enforcement.

The city will waive penalties and interest on back taxes going back six years - the statute of limitations for the city to prosecute tax evaders. An application for amnesty must include complete payment of the original tax liability, though the city will consider short-term payment plans in hardship cases.

Most city residents pay their city taxes through payroll deductions and aren't even required to file a return. The amnesty is targeted at hard-to-collect accounts: out-of-town employers who may not be aware of the withholding requirement, itinerant professionals such as lawyers who practice in a Cincinnati courtroom more than 12 days a year and property owners who receive rental income.

One benefit to the amnesty program is that it will get taxpayers on the books for future years, said Finance Director William E. Moller.

Republicans, who see the problem as one of spending, not revenue, have been warning for months - if not years - that increasingly drastic measures would be necessary.

State Rep. Tom Brinkman Jr., R-Mount Lookout, said the cuts were an effort to undermine an initiative petition that would phase out the city's property tax over 10 years.

But Luken insisted that the city's budget woes could be worse - Cleveland has laid off 250 police officers and stopped collecting trash downtown - and that Thursday's action represented "responsible, short-term measures."

"This is the medicine Cincinnati needs at this time to ensure service delivery," Luken said. "We're not unlike Norwood, Cheviot or any other community you've been reading about in the paper lately."

E-mail gkorte@enquirer.com.