Ohio Gov. James A. Rholdes submitted legislation today that would provide for a state takeover of Cleveland's finances.
Rhodes' plan would establish a nine-member commission that would be dominated by his own appointees and would be responsible for preparing a financial bail-out plan for Cleveland which defaulted on $15.5 million in loans in December.
The commission would have veto power over any city attempt to diverge from the state plans. Rhodes' legislation would make it a criminal offense to obstruct or circumvent the commission.
"This is not a Cleveland takeover bill," said Rhodes, despite the tough restrictions that would be placed on Cleveland Mayor Dennis J. Kucinich.
Kucinich said. however: "The situation is not so bad that the city of Cleveland should relinquish home rule."
Kucinich met with legislative leaders from the Cleveland area and said the city would need a short term state loan until it could regain its credit rating and issue long-term bonds.
Kucinich did not describe the size of the loan he wants. State Rep. Harry J. Lehman of the Cleveland suburb of Shaker Heights, said the city would want at least $14.5 million to repay the Cleveland banks holding the defaulted notes ( $1 million worth of the notes are held by the city treasury) and possibly as much as $40 million to cover all of the city's short-term debts.
While Kucinich opposes Rhodes' plan for a commission, the mayor said he is willing to accept a state-appointed fiscal agent that would assure that future bond proceeds would not be misspent.
The city has a total of $40 million missing from a capital improvements bond fund. That money was diverted illegally for operating expenses.
Kucinich wants the state legislature to permit the city to issue new bonds to cover this deficit.
The mayor asked that the legislature not act on Rhodes' plan until after the Feb. 27 city vote on a 50 percent income tax hike.
A Kucinich administration official said voters might reject the tax hike if there is any confusion over what type of state aid the city might receive.
"I don't look for this bill to rush through unless conditions deteriorate," Lehman said.
Lehman said the legislature would attempt to find a compromise solution between Rhodes' proposal and that submitted by Kucinich.