East Cleveland officials are reviewing options to fight against state control of their finances, but a lawsuit might be the only measure to at least delay the process.
At a special council meeting Tuesday night, East Cleveland’s law director, Kenneth Myers, proposed the lawsuit to block receivership. He also gave a warning about the court-appointed receiver if a lawsuit is not filed.
“You may decide that’s a good thing, let the receiver make the decisions,” Myers told council. “That’s an option. But the receiver has broad powers. Unlimited. Only limited by a judge in Columbus.”
Under a state law passed this year, tucked away in the state budget, the Ohio Auditor of State can refer cities like East Cleveland, now under fiscal supervision for nearly 30 years, to the Ohio Attorney General to have a receiver appointed.
Once that happens, the Ohio Court of Claims appoints someone with authority over all financial decisions made by a city.
Auditor Keith Faber formally informed East Cleveland on Monday he planned to take this step. The law went into effect Tuesday. On the same day, Faber made the referral to the attorney general.
Myers told council he had approval from Mayor Lateek Shabazz to file a lawsuit to stop the process, based on the city’s home rule authority. But they want council’s support before moving forward.
“This hit us all like a lightning bolt yesterday,” Myers told council. “We have a very short amount of time to make a very consequential decision. This is what you all signed up for.”
Myers encouraged council to schedule another special meeting later this week to vote on filing the lawsuit. Council members were conflicted about what to do.
The city has been under fiscal supervision for all but a few years since 1988. The state auditor’s office has been unable to complete audits of the city because of missing records. The most recently elected mayor, Brandon King, was convicted of theft in office earlier this year. His predecessor, Gary Norton, was removed from office by recall and pleaded guilty to federal obstruction charges.
“It’s just, like, a negative cycle that there’s nobody to be trusted,” said Councilmember Twon Billings, adding it may be too late for East Cleveland to solve this on its own. “I want to save East Cleveland, but I've seen these missiles fired at East Cleveland before. These people gave us rope after rope after rope after rope. And now that they're starting to make their move, I don't know if we can stop them.”
This council meeting couldn’t even be completed without new charges of theft in office. Shabazz’s chief of staff, Eric Brewer, accused Shabazz’s predecessor, Sandra Morgan, of failing to properly account for more than $5 million in grant money during her short tenure in office.
Later in the meeting, Morgan, who's running against Shabazz for mayor in November, was called up to explain the missing money.
“Let me say this about that,” Morgan said. “If there is money missing, then it has been misplaced by the current administration, not by me.”
She added that on the day she left office, July 17, there was still $5 million in the account with the alleged missing money.
Morgan is a member of the current fiscal commission and was appointed interim mayor after former Mayor Brandon King was indicted.
In a statement on her campaign website posted Monday, Morgan expressed support for going into receivership.
“I welcome this intervention,” Morgan wrote. “I see it as an opportunity, not just to uncover the truth, but to build the foundation for a stronger, cleaner, more responsible city government.”
One member of council, Timothy Austin, argued the city should prepare for a receiver to come in and finish their work as fast as possible.
“It’s still going to be East Cleveland,” Austin said. “We’re going to go through the process and figure it out until we’re healthy and whole again.”
Other residents and council members weren’t so sure about what would be left on the other side of a receivership.
The receiver would have the authority to require the city to follow the recommendations of the fiscal commission.
In a letter sent Wednesday to the state auditor and attorney general, Shabazz rejected the receivership and placed much of the blame for the city’s ongoing problems on mismanagement by the current commission, which has been in place since 2012.
“East Cleveland entered fiscal emergency with a $5.87 million deficit on October 9, 2012,” Shabazz wrote. “Under the Auditor of State's supervision as the designated Financial Supervisor, that deficit has ballooned to an estimated $70–100 million.”
Faber said anywhere from $60 million to $70 million of that deficit is from civil judgments against the police department.
Many residents and council members expressed concerns at Tuesday’s meeting about whether there was a long-term plan to redevelop the inner ring suburb and displace residents.
“Everybody knows the plan, there's two tables,” Billings said. “There's a table they let you play in and there's a table that they make the decisions in. And at that table, they came ready to come in and make their moves.”
But several, like Eve Westbrooks, said they feel stuck, unsure about a receiver but also were running out of patience with the people running the city.
“We want East Cleveland to be our home," Westbrooks said. "A safe place, a clean place, and we're not getting that. We're just getting more and more negative stuff. And this is true, this receivership is a two-edged sword.”
Some council members plan to hold at least one public meeting over the weekend and schedule a special meeting next week to vote on the lawsuit.
