Springfield, Middletown heading for fiscal cliff, state auditor warns

Credit: DaytonDailyNews

Caption
Second guy is Kent Scarrett of the Ohio a Municipal League

Credit: DaytonDailyNews

Thirty-one Ohio cities including Springfield and Middletown - show signs of elevated financial stress — an indication that they could be on the highway to deep trouble, especially in the event of a recession, according to Ohio Auditor Dave Yost, a Republican who just announced he is running for attorney general.

A large percentage of Middletown’s assets need replacement or significant repairs and it faces a declining ratio of revenue to cover expenses, the report said. Springfield has a critically low reserve of money to cover unexpected costs.

“The bottom line is I’m a little bit concerned about the effect of the next recession,” said Yost at a press conference Wednesday. “But a lot of it will depend on the nature of that recession — how widespread the pain is among Ohio’s local governments.”

Springfield and Middletown are the only local cities on the list. Three counties are on Yost’s list, but none of them are local.

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Using 2015 data in 17 key areas, such as fund balances, revenue trends and debt, the state auditor issued a report to cities and counties on how they’re doing. Yost said he doesn’t like putting local governments into “fiscal emergency” status so he wanted to give cities and counties data that might help them head off trouble.

“Think of this as a fiscal physical,” he said.

Overall, 82 percent of counties and 92 percent of cities have at least one cautionary or critical indicator.

Among local governments that are seeing multiple red flags are Middletown and Springfield, according to Yost’s report. A large percentage of Middletown’s assets need replacement or significant repairs and it faces a declining ratio of revenue to cover expenses, the report said. Springfield has a critically low reserve of money to cover unexpected costs.

Overall, local governments have navigated choppy waters pretty well, he said.

Kent Scarrett, executive director of the Ohio Municipal League, said the report and data “puts a finer point on what we’ve been talking about. That there are great challenges out there in different communities and it’s incumbent on us as local leaders and state leaders to try to address these.”

Yost’s report comes just before Ohio Gov. John Kasich is set to unveil his two-year state budget plan, in which local funding levels will be debated.

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