This debt-ridden city took a flying leap toward fiscal solvency today when the city council, after an emotional session, approved two ballot issues designed to raise revenue.
But the measures, which will be submitted to the voters Feb. 27, do not guarantee that cleveland can pull itself out of the short-term default it found itself in last week or the long-term credit crunch it has been in for months.
Nor do they mean that Cleveland can avoid the 2,000 layoffs of city employes that Mayor Dennis J. Kucinich said would occur Jan. 2 unless six local banks agree to roll over or refinance, $14 million in notes that the city could not repay last week.
However, Kucinich said 1,500 of the layoffs could be cancelled if the council agrees to meet again Tuesday and passes an ordinance pledging city income tax receipts as collateral on the notes. Such an action presumably would persuade the banks to proceed with the rollover.
Finance Director Joseph G. Tegreene said after the council approved the ballot issues-one to raise the city income tax from 1 to 1.5 percent and another to sell the ailing municipal light system-that "significant progress was made toward arranging the rollover of the notes."
He added, "We are a little closer to addressing the default problem but we still have a long way to go."
The mere fact that the council, led by Kucinich's arch-foe, George L. Forbes, and the city administration had agreed on any steps was seen as a remarkable political development. Kucinich and council president Forbes have been bitterly feuding for nearly all of the 13 months the mayor has been in office.
Only a week ago the council turned down a Kucinich proposal to raise the city income tax because the mayor would not agree to sell the Municipal Light Co., called Muny Light. He refused largely because it is the vehicle through which the city is suing the big private utility here, the Cleveland Electric Illuminating Co. (CEI) for $325 million in an antitrust action.
This week, however, Kucinich agreed to put the sale issue on the ballot if the council would also submit the tax measure to the voters. Kucinich said he would campaign against the Muny Light sale and for the tax increase.
Both issues could fail because Clevelanders have voted three times in this decade not to raise income taxes, and many of them feel Muny Light has kept CEL from raising rates unduly.
Thursday night CEL surprised the city by saying it was withdrawing its two-year-old offer to buy Muny Light for $158.5 million. It charged, in effect, that the deteriorating municipal plant was not longer worth that amount and that Kucinich, "through delay and harassment," had "clearly killed the city's offer to sell."
This morning Kucinich scoffed at CEI's announcement by saying it had made similar ones in recent years and by likening CEI to "a fox who, being caught in a chicken coop, suddenly proclaimed he had lost his taste for chicken."
Kucinich predicted the utility, which sells power to Muny Light, would now try to buy it for a lesser amount.
"They don't want to buy it:they want to steal it," he charged.
The council met about 90 minutes late. During the delay, Forbes was conferring privately with all 33 members trying to get a consensus on the two ballot issues. "I'm calling them in two by two, just like Noah's Ark," he quipped.
Kucinich had asked the council to pass the two measures. When he saw the Muny Light issue, however, he urged that it be amended to ensure the city's right to continue its lawsuit against CEI.
As written, he charged, the measure had "too many loopholes. You will vote for something today you will regret later on."
Forbes, angered by the mayor's attack, said, "I think this city is torn into eternal turmoil that I don't know how to overcome.
This legislation was drawn with the intent to create harmony. It's a battle we're going to lose."
Forbes assured the mayor that "the lawsuit can be retained and added:
"We have a city that's almost become a laughing stock of the country. I'm quickly coming to the conclusion that this is a game with some people. It's like Monopoly or marbles. The tragedy is that you're dealing with the lives of 700,000 people."
Forbes' lobbying before the meeting paid off. despite efforts on the floor by Kucinich aides to defeat Muny Light measure, it passed 27 to 6. The income tax issue passed 32 to 1.
After the meeting a spokesman for the Cleveland Trust Co., which holds $5 million of the defaulted notes, was noncommittal about a possible rollover of the debt. But an official of another bank said, "I feel a lot better about it now than I did this morning. I think the two ordinances which passed were positive."
Tegreene said that besides securing the rollover, the city must ask the state to let it issue new bonds and to appoint a fiscal agent to oversee its finances. He said the city needs to sell $90 million worth of bonds this spring- $40 million to consolidate its short-term debt, $40 million to cover past bond proceeds that have been diverted to current operating expenses and $10 million to buy snowplows and garbage trucks.
Just before the council meeting Kucinich rushed off to review a parade of 145 orange snow removal trucks. As he watched from the council clerk's office, Police Patrolmen's Association President William McNea commented, "I don't believe this.Little trucks. Big trucks. The town's burning, and they're parading."