Cleveland Heights Faces Tight Budget Battle

The city’s new finance chief is pushing for stricter spending while waiting on two pending state audits that will decide its bond rating. He told the finance committee in early February that Ohio’s Auditor should finish the 2023 audit soon, and he expects no major surprises. The city still has a few items to file before it can submit its 2024 audit, after which the 2025 audit will follow. Because Moody’s last removed Cleveland Heights’ “A1” rating, the city now has no credit score until audits are done. Mayor Jim Petras also revealed that the town has hit a surprise bill of nearly $850, 000 this year. The first part is a $400, 000 invoice from the apartment developer Flaherty & Collins that wasn’t in the budget. The second part is a lawsuit from out‑of‑state landlords who paid $100 extra to get occupancy certificates; they won a judgment of about $340, 000 plus legal fees. The mayor said the city is scrambling to fit these costs into its budget without dipping into a $20‑million cash reserve. Council Vice President Gail Larson asked how much of the general fund should stay untouched for safety and credit. The finance director said a healthy cushion is 20‑30 % of annual operating expenses, and the city sits at about 26 %. The council is also drafting a new rule for nonprofit funding. It will start with $20, 000 from the city’s discretionary account and could cover larger requests from groups like Future Heights or Cleveland Heights For Immigrant Rights, which wants a six‑figure sum for legal fees. The finance director warned that the city should not commit large unbudgeted amounts until it regains its bond rating, especially since the audits are still incomplete.Councilwoman Jessica Cohen thinks the new funding rule will set clear expectations for nonprofits, while Councilwoman Sarah Stone pointed out that state arts councils require post‑event reports before reimbursement. In Cleveland Heights, the city may refuse future funding to organizations that do not submit final reports. Earlier in the year, a team led by former assistant finance director Rachun Caldwell began listing contracts that didn’t need council approval. These are under $50, 000 and should be posted on the city’s website for transparency. The new administration has almost finished compiling that list, but it remains a labor‑intensive task. There is no central repository for contracts yet, and the finance director said he will trim more than 100 city funds to simplify accounting. An unexpected boost came in January when the state sent about $200, 000 for adult cannabis taxes from a local dispensary. A second payment of around $10, 000 to $12, 000 followed. The city also earned an extra $161, 000 from local fees and permits. However, overall cash fell by $17. 5 million this year compared to last year, mainly because the American Rescue Plan Act funds are being spent down. All remaining pandemic relief money must be used by 2026, even though the city received over $38 million from federal sources.