Mayor Dennis J. Kucinich, in a startling reversal, said today he would sponsor a ballot proposal to sell the city's ailing electric light plant.
His move was seen as a possible breakthrough in Cleveland's effort to solve its fiscal crisis. City Council President George L. Forbes, Kucinich's political arch-enemy, called the mayor's action a "restoration of santiy."
The mayor and the council have been at odds for months over the future of the plant, which is about $50 million in debt.
Kucinich restated his opposition to the sale, which the council has favored. But he said he was offering to put the issue to the voters to "break the political deadlock which is unnecessarily paralyzing our city."
Cleveland defaulted on $15.5 million in short-term notes last Friday and faces bankruptcy early next year unless it can get its financial house in order. Part of the deadlock came when the council refused Friday to accept Kucinich's proposal to ask the voters to raise the city income tax from 1 to 1.5 percent.
Today Kucinich called on the council to approve referendums on two charter amendments - one to sell the Municipal Light and Power Co., popularly called Muny Light, and the other to increase the income tax. Kucinich said he would campaign for the tax and against the Muny Light sale, which would be voted on 60 days after council approval.
He said he hoped the council, which is in recess until Jan. 8, would meet Friday to consider the ballot proposals.
Forbes said, "I won't wait that long. He may change his mind. If I can get legislationdrawn up tomorrow I'll call a council meeting tomorrow."
Kucinich said he would "call on Cleveland's financial institutions to extend the city's credit so we can pass the tax and put our financial plan into effect. If all parties agree, I will be able to cancel most of the scheduled layoffs." On Monday the mayor announced he would lay off 2,000 of the city's 10,000 employes on Jan. 2 in order to get the city out of default.
Kucinich's statement drew a cautious response from the banking community.
Frederick Cox, vice chairman of the Cleveland Trust Co., which holds $5 million of the notes that the city failed to repay, said, "We are encouraged but we cannot comment further until the details become clearer....as we have said before, we plan no immediate action to call our notes."
A spokeman for National City Bank, which holds $4 million of the notes, called Kucinich's offer "a positive step" but noted that the city has yet to present a financial plan to the banks that the council and administration have jointly approved.
Cox's statement tended to confirm reports that the local banks, which hold $14 million of the $15.5 million in defaulted notes, (the city treasury holds the rest) do not intend to press claims to the money in the next few weeks.
Cleeland got another bit of good news today when Jack Gannon, president of the local firefighters' union, made it clear the city will not face an immediate general strike.
On Monday - after the mayor announced plans to lay off 875 police officers, 450 firefighters, 250 refuse collectors, 225 recreation workers, and 200 other city employes - there were threats of an imminent general strike.
Gannon, referring to the Jan. 2 lay off day, said today, "We have two weeks to get our problems resolved. We plan no action in that period."
The Muny Light issue has long commplicated city finances. The City-run plant, which has not generated a watt in two years, distributes electricity that it buys from the Cleveland Electric Illuminating Co., a private firm.
Muny Light serves only 20 percent of Cleveland's population, and most of its customers live in the white ethnic wards that have backed Kucinich. Because of city subsidies to Muny Light, its customers pay about $2 less a month in electric bills than the other 80 percent of city residents, who are CEI customers.
This year a federal court ordered Cleveland to pay CEI $12 million for power that Muny Light had purchased but failed to pay for. The city has now paid all but $3 million of the debt. Also, the city filed an antitrust suit against CEI for $330 million several years ago. The case is due to come to trial Feb. 5.
Kucinich contends the city will win the suit and claims that Muny Light serves to keep CEI from raising rates unduly. But critics, including Forbes, say that for every $2 saved by Muny Light customers the city pays $7 in tax money because of interest the city has to pay on the $12 million judgment to CEI
Last weekedn the City Council majority leader, Basil M. Russo, proposed putting the Muny Light issue on the ballot. But on Monday Kucinich rejected the suggestion, saying he feared CEI would finance a campaign in favor of the sale.
"I'm not going to cive CEI and opportunity to steal an election," he said then. "We cannot permit white-collar criminals to take away a people'd electric system."
Today, in announcing his turn around, Kucinich said he is "still concerned," about CEI's "great economic power," but added that he believed the public will defeat the proposal to sell Muny Light. which CEI has offered to buy for $158.5 million.
He also said, "We need to protect that anatiturst suit," which somesources said might pose an obstacle to the council's approval of the ballot issue.