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Lorain Income Tax

Monday, April 28, 2003 at 3:19 PM

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Like many communities around Ohio, the city of Lorain is facing a sizable budget deficit this year. Revenues are down in the Lake Erie port where steel and automaking are still the key industries. Lorain has also lost more than a million dollars in state funding and has had to scale back some emergency services. The state auditor has placed the city under fiscal watch until it can turn its projected $2.4 million deficit around. A broad coalition of community leaders - among them the Republican mayor - is supporting a temporary income tax they believe will put Lorain back on its feet. But one Democratic challenger says the temporary tax may not be enough to do the job. Ideastream's Karen Schaefer reports.

The city of Lorain is Ohio’s 10th largest urban center. Situated on Lake Erie west of Cleveland at the mouth of the Black River, Lorain’s development has paralleled that of its big city neighbor. But here the Rust Belt years have lingered. Little of the 90’s boom reached Lorain. So it’s not surprising that the economic hits of the last year and a half have cut deeply in this city of nearly 69,000 people.

Ken Shauver: Unfortunately, it’s not like being at home. At home you can cut out that one movie or that dinner - but the general public still wants their roads repaired, they still want their parks cut.

That’s Ken Shauver, president of Lorain’s city council. He’s one of many local leaders who supports the passage of a one-eighth percent temporary income tax on the May 6 ballot. Shauver also says his all-Democratic council is almost unanimously behind the tax, in agreement with the city’s lone Republican elected official, Mayor Craig Foltin.

Ken Shauver: Even though there’s political differences sometimes between the council and the administration, the tax is a necessity for the community as a whole, regardless of what political party you’re affiliated with.

Mayor Foltin agrees. He’s nearing the end of his first term as Republican chief administrator in this Democratic stronghold. And he’s hoping for re-election. Foltin, still in his 30’s, insists the need for additional revenues is the result of the stagnant economy.

Craig Foltin: The city, as well as the country and the whole state, have been hit pretty hard by the economy, Lorain a little harder than most, because we are an old-style factory town, our two biggest employers are the steel mill and the Ford plant, so when there’s a recession or an economic downturn, we’re hit pretty hard.

Foltin says the city’s income tax revenue is down about $1.7 million over what it was just 3 or 4 years ago.

Craig Foltin: To top it off, the state has cut over a million and a half dollars in its funding to local governments and particularly the city of Lorain in an effort to help balance its budget.

Lorain now has a projected $2.4 million deficit that led the state auditor to put the city under fiscal watch. In addition to seeking new revenue through the temporary tax, Lorain’s dark horse mayor says he’s gotten police, fire and non-union city employees to accept a hiring freeze and to pay some of their own healthcare costs. Last year, he had to lay off some emergency workers. The city is still down five firefighters and is 14 police officers short of 2000-staffing levels. Foltin says extra costs involved in new homeland security measures have added their part to Lorain’s finanial burden.

Craig Foltin: Particularly, we’re on the water, which poses an even bigger threat. We have a water plnat here, we’ve had to put up fences, install security systems, put in ID systems in these areas.

Passage of the temporary tax has broad-based bi-partisan support in Lorain. The campaign committee is headed by three Democrats and includes presidents of two local banks and the local hospital. Even former mayor, now State Representative Joe Koziura agrees the additional revenue is essential if the city is to maintain basic services. But Koziura, who lost his re-election bid to Craig Foltin four years ago, is once again throwing his hat into the ring. He’s one of three Democratic candidates for mayor on the primary ballot. Koziura contends he saw the city’s deficit coming several years ago.

Joe Koziura: When I ran in 1999 in the mayor’s race, I had said at that time that we might get through the year 200 without either some additional revenue coming into the city through normal economic terms, or we would probably have to seek a tax increase sometime later in 2001, 2002. And certainly, that came true.

Last year, Lorain City Council proposed a dual tax to deal with the growing deficit. But Foltin says he couldn’t support the terms of the proposal, which called for a quarter-percent permanent income tax and the cancellation of tax credits for workers who live outside Lorain.

Craig Foltin: I’ve always felt a government will grow to meet its revenue, instead of the other way around. It’s kind of like the old adage about a horse who comes across some spilled oats in the road, he’ll eat and eat until it keels over. And that’s what government seems to do with taxes and money.

But Joe Koziura doesn’t buy that argument. He held the reins on city spending without a tax increase when Lorain lost nearly $2 million in revenue in 1998 with the closing of a Ford manufacturing line. Koziura accuses Foltin - who was city auditor for six years before he became mayor - of gluttinous public spending.

Joe Koziura: This city’s been overspending for the last three years, it’s no question about it. They’ve used money from other funds, they’ve been using the water funds, the sewer funds. In fact, the one-eighth of one-percent is not going to cure the city’s problems by any stretch of the imagination.

But current mayor Craig Foltin defends his record, pointing to major road and waterfront improvements that cost the city little or nothing. He says he’s cleaned the fat from city government and now it’s time for the residents to contribute their fair share.

Craig Foltin: What this will do is get us out of our deficit situation by the end of next year. We’d obviously like more, but we have to take what the citizens would be willing to give us.

If Koziura wins the Democratic ticket, it will clearly be politics as usual in Lorain this fall as voters prepare to choose their next mayor. But this May, Lorain politicians agree that voting yes on Issue 22 is the best course for everyone. In Lorain, Karen Schaefer, 90.3.

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