Ohio Auditor of State Keith Faber has given the City of Marion a fiscal emergency designation. But, with the right management and an aggressive approach, he believes Marion can recover and exit fiscal emergency status.
The state auditor will act as financial advisor to a commission composed of state and local officials and appointees. Faber expects the commission’s first meeting to come sometime in August.
Marion joins 13 other government entities that have been put in fiscal emergency, including three cities.
“We don’t put an entity in fiscal emergency lightly,” Faber said. “We take it very seriously. We audit more than 6,000 entities, we do 4,800 a year. So the fact that there’s such a small number tells you how much we try to work with entities to keep them out of fiscal emergency.”
Faber said it was “very unusual” for a city to go without reconciliations, in Marion’s case for years, and “even more unusual” for the auditor to have to disclaim its audit opinion because “they can’t trust the information they’ve been given.”
“The City of Marion and their current officials certainly had to know that they had a hole in their fiscal pie that they needed to be working on,” Faber said.
Auditor recommended aggressive approach to fiscal emergency
While some entities were able to get off the fiscal emergency list in fewer than five years, others, like the city of East Cleveland, have stayed in fiscal emergency for more than a decade. For East Cleveland, Faber explained an Ohio law had to be enacted giving a court-appointed official significant control over the city’s finances.
“Marion certainly isn’t in that capacity,” Faber said. “It’s not even close. Marion, I think, going forward can certainly plan and manage their way out of this problem.”
Faber recommended Marion officials take the designation seriously and deal with it aggressively. He commended the City of Niles for how it handled its fiscal emergency. There, they hired a fiscal manager to rein in spending, ending its fiscal emergency “in record time,” he said.
“They’ve done good things,” Faber said, “and I would just encourage Marion to follow that method instead of the resistance and the obfuscation and some of the other things that happen in other cities like East Cleveland.”
In preparing for the 2026 budget, Marion Mayor Bill Collins told almost all departments to cut their budgets by 10% to reduce the deficit. Collins has repeatedly warned city council that further cuts could mean layoffs. But, upon hearing of the fiscal emergency designation, Collins assured his staff that cuts would not be made anytime soon.
“It will be beneficial for the city council and the mayor and the department heads to go back and look at every dollar they spend and say, ‘hey, is this absolutely the best use for these funds? Or is it just we’re spending this because we’ve always spent this here?'” Faber said.
‘Get on the same page’
So far, Faber described communication from Marion as “positive.” The city requested an analysis in November and was later designated to be in fiscal caution. After two recovery plans were rejected, the state further analyzed the city and declared the fiscal emergency.
Marion’s designation comes from the millions of dollars in deficit funds. According to the state auditor’s report, the deficit has grown to be more than the legal threshold, pushing the city into fiscal emergency.
While it’s not entirely clear how much Marion’s deficit totals due to years without reconciliation and audits, the 2021 audit report found an estimated $8.9 million deficit fund balance. That amount may change as the city completes its outstanding reconciliations.
While Faber doesn’t think it will be easy, he believes the city can recover.
“I think they all need to get on the same page with the simple goal,” Faber said. “Let’s get these deficits to take care of, let’s get out of fiscal emergency and get back to a city that the taxpayers can have confidence in that their books and records say what they mean.”
This article originally appeared on Marion Star: State auditor urges Marion to be aggressive to fix fiscal emergency
Reporting by Abby Bammerlin, Marion Star / Marion Star
USA TODAY Network via Reuters Connect
By Abby Bammerlin, Marion Star | USA TODAY Network
