UPDATE 8/7/13 @ 11:30 p.m.
PORTSMOUTH, Ohio (WSAZ) -- Portsmouth City Council approved a plan Wednesday night to try to get the city back in the black.
The city has had four months to find more than $500,000 in annual budget cuts to erase the deficit.
The Ohio State Auditor says they've been watching the city's finances since the deficit was found in 2010, and if the problems weren't corrected, the state might have to take over.
On Wednesday night, Mayor David Malone introduced the new plan, which includes reducing the public service department by three employees.
It also includes a 20 percent premium rate increase in the health care line.
There'll also be no annual personnel raises for five years.
"This council is dedicated to get us out of fiscal watch," City Council President Steve Sturgill said. "We're going to do whatever it takes to make sure citizens continue to receive the same services they've received over the course of the last 20 years."
The plan will be presented to the State Auditor's office on Friday.
Sturgill says parts of the plan may change if adjustments need to be made.
“This is a real disservice to taxpayers,” said Auditor Yost. “The process has two parts: coming up with the plan and then following through on it. Sitting on the recovery plan does nothing but allow the city’s fiscal condition to worsen.”
The City of Portsmouth was placed in fiscal caution on November 22, 2011 based on the city’s 2010 audited financial statements. The audit included various noncompliance issues with Ohio law, significant deficiencies and material weaknesses.
The audit report disclosed that the city’s general fund had a deficit fund balance of $530,043 at December 31, 2010. The city’s municipal court grants and rural AIDS state grant special revenue had deficit fund balances of $9,482 and $10,332, respectively. In addition, Portsmouth’s insurance fund was owed $426,000 by other city funds.
The initial declaration required the city to submit a recovery plan to address its fiscal issues.
On February 29, 2012, the Auditor’s office reviewed the written proposal and determined the plan was acceptable.
Then on November 30, 2012, the Auditor’s office notified the city that it had made very little progress on correcting or eliminating the issues and that prompted the fiscal caution declaration.
The City of Portsmouth must now submit a new financial recovery plan within 120 days that identifies the actions the city is taking to correct its financial problems.
If the city is unable to submit an acceptable recovery plan, fiscal emergency will be declared and a financial planning and supervision commission would be appointed.
A tax increase was recently approved that's expected to bring in $2.5 million, but now the state's turning up the heat. It is asking for a five-year plan in the next 60 days.
Portsmouth Mayor David Malone says that will not be easy.
"The challenge is that the cost of services keeps going up, and we only have so much money that we can give to the services for our community," Malone said.
He said he feels confident city leaders will meet the deadline for their five-year plan.
After narrowly failing two elections ago, the city will now take in nearly $3 million in tax dollars to bolster its struggling police and fire departments.
After counting the provisional ballots, the income tax hike passed by 50.35 percent -- just 32 votes. But that's more than enough to not require yet another mandatory recount. It's also enough, the fire and police chiefs say, to halt further personnel or service cuts to the fire and police departments
But with Portsmouth politics, it seems that bad news often follows any good news, and the two were simultaneous.
State of Ohio Auditor Dave Yost came to town with the message -- fix your budget now, or we will do it for you.
Indeed, Yost came to declare Portsmouth in the new state of fiscal caution. Joining the Portsmouth city auditor, Yost said continuing deficits in various city funds -- and spending many thousands more than you take in -- demand a City Hall correction plan in 60 days.
City leaders say they're ahead of the game in turning around a $1.2 million deficit -- with union concessions, passage of the city income tax hike and tightening belts in all departments.
If the fiscal fiscal caution situation isn't corrected, it could lead to a state watch and emergency status -- as in a state government takeover.
Under this state caution, Portsmouth is losing $1 million a year in state revenue sharing cuts.
Mayor David Malone says next week, he'll present City Council with a budget he believes will turn that deficit around.
The recount started about 3 p.m. Tuesday.
In order for the tax levy to pass without a mandatory recount of all votes, the provisional ballots needed to be outside of a one-half of one percent margin.
When all of the ballots were recounted -- the levy passed by 32 votes.
The city of Portsmouth is all too familiar with the recount process. This was the second time the income tax hike, dedicated to Portsmouth fire and police protection, was put on the ballot. It failed last election by just three votes -- after a recount.
The recount on Tuesday, passing by 32 votes, is outside of the one-half of one percent -- which will keep the levy from a mandatory recount.
The only way the vote would be recounted at this time is if an opposing side files for a recount.
Keep clicking on WSAZ.com for the latest information.
After Tuesday night's razor-close tax vote in Portsmouth -- it's not a done deal yet.
It’s déjà vu for voters in Portsmouth.
After an income tax hike dedicated to Portsmouth fire and police protection failed last election by just three votes after a recount, city leaders decided to put it back on the ballot.
It won -- but just by 16 votes.
That’s not enough to declare victory and avoid what some say is a real threat to public safety. But, it was enough for some to be optimistic, as the precinct returns rolled into the courthouse.
Nervous Portsmouth city leaders watched the proposed six-tenths of one percent income tax hike stay close to 50-50 throughout the night. And when the final difference was just 16 votes, in favor this time instead of against, the optimistic fire chief started making plans to boost his, about eight-man short, staff back to full strength and open the Hilltop station.
The soon-to-be Portsmouth interim police chief said without the tax hike a department working at bare minimum might have to stop answering certain emergency calls.
“Obviously, if we did not get the levy passed, we’d have to look at cutting services and manpower," Capt. Robert Ware explained. "We’ve cut everything else we can cut.”
And the Portsmouth mayor, after sweating out the previous tax hike recount that lost by three votes, said with a million dollar city deficit, cuts in city workers and services will go on the table if the tax increase fails again.
The Board of Election folks say they still have to count 500 provisional ballots. After that, if the vote tally still shows a less than one half of one percent difference -- they'll do another mandatory recount.
They will have 10 days to count those provisional ballots.
Keep clicking on WSAZ.com for the latest information.
In the hard hit community of Portsmouth, the voters will make decisions next Tuesday on a possible radical change in leadership, as well as a desperate plea for higher taxes.
Click here to find out more!
WSAZ.com has a preview of some volatile voting issues in the city of Portsmouth, where some of the political turbulence of the past few years has simmered down a bit.
But there are two hot button charter amendments on the ballot.
And the one sparking the most water cooler comments is a proposal to change from a strong mayor to a city manager form of government.
Portsmouth City Councilman John Haas says the time had come for that. He says with two divisive politically charged mayoral recalls during the past decade, the decision to propose a change from strong mayor to city manager needed to go on the ballot.
“We’ve discussed it in council," Haas said. "We heard some concern from the public, so we decided it needed to be on the ballot.”
For the past five years, Steve Corbitt has served as city manager for Ashland, Ky.
Corbitt says his take on the choice is based on the following: a city manager provides more oversight, has professional training as a decision-making executive, and the job limits the authority of a single individual -- like a strong mayor.
"If someone comes in with a personal agenda, be it far right or far left, that person can ruin things in a very short time,” Corbitt said.
Current Portsmouth Mayor David Malone says he has no personal agendas. Malone says a strong mayor trumps a city manager form of government by letting the people elect someone with an honest vested interest in the community.
“The mayor form gives someone who is vested in the community the opportunity to come forward with positive solutions for the city,” Malone said.
Unlike Ashland, if Portsmouth voters decide on a city manager, the mayor would not be elected -- but named -- while sharing the job of city council president.
The second charter amendment is making its second straight appearance on the river city ballot. It’s a proposal to raise the Portsmouth city income tax by six-tenths of 1 percent.
In the May primary, after a razor-close vote and a number-crunching recount, the tax hike -- earmarked for the fire and police departments -- failed by just three votes.
Portsmouth Fire Chief Bill Raison said, with city revenues on a 10-year decline, with a reduced staff and only two fire stations open instead of three, a budget stretched any tighter could jeopardize public safety.
“At a fire we've got the same duties to perform if we've got six or 20 on hand, usually these days it's six," Raison said. "And any delays in those duties can cost, in property damage and in lives that are jeopardized."
Raison says while Portsmouth’s population hasn't changed much in years, the resources to safely protect the citizens has dwindled disproportionately.
Malone says if the tax hike fails this time, across-the-board layoffs and cuts in city employees and services are inevitable.
At the Scioto County Board of Elections, the count started at 1 p.m.
After the primary, the proposed city income tax hike failed by nine votes. But about 20 provisional and other votes were not counted.
When those votes were included, the tally was two votes against.
And that demanded a one by one recount.
And, it's important to remember, the tax increase is earmarked for the struggling and understaffed police and fire departments.
With Portsmouth Mayor David Malone closely monitoring the recount, the board took about an hour to determine that the income tax increase still failed, by three votes 847-844.
The mayor says while there are no plans to lay off any fire or police employees, city budget belt tightening will continue
“We will cut corners, so that we can try to get to where we need to be,” Malone said.
He says all five city employee union contracts are soon to expire.
The fire chief says he expects some concession demands. Malone says there will be no concession demands. He says he will look at what is in the best interest of the city and expects the negotiations to be tough -- to say the least.
Malone says the council will discuss putting the now failed income tax increase proposal back on the November ballot.
After a final tally Wednesday , the levy failed by 3 votes. The final vote count was 847 against and 844 for the levy.
On election night, there was a nine vote difference, with the levy failing. Then after counting the absentee and provisional ballots, there was only a two vote difference, the levy still failing.
The tax was to be directed for police and fire protection.
WSAZ has a crew on the scene and will have reaction on the vote from Portsmouth Mayor David Malone on WSAZ NewsChannel3 6 O'Clock.
After including 18 uncounted absentee and provisional ballots, the board of election says the tax hike was defeated by just two votes -- 846 against and 844 for.
The difference had been nine votes against.
The tax was to be directed for police and fire protection.
The close margin requires a mandatory recount. Those results will come May 25.
But the balloting is not a done deal -- just yet.
After more than 1,600 in Portsmouth voted, with nine more saying "no" than "yes," there are still 16 provisional ballots yet to be counted -- absentees, military votes -- some maybe still in the mail.
The tax increase is targeted for firefighters and police, with both departments saying their budgets are already cut to the bone.
Portsmouth city firefighters say they're extremely disappointed after campaigning hard to pass the proposed six-tenths of 1 percent city income tax increase.
They say the department is already dangerously understaffed, explaining that the city is at half the national standard for firefighters per truck.
And, after the budget forced closure of the vital Hilltop station, city firefighters say the reality of increased response times will have a ripple effect.
“We're worried, not just for the safety of the community, but the safety of ourselves," Portsmouth Fire Capt. Chris Lowery said. "This puts everyone at risk.”
Already cutting city employees and services while dealing with a $1 million plus deficit budget, worried Portsmouth Mayor David Malone hopes Tuesday’s razor-close no vote sways to the yes side -- for the community’s sake.
“I'm concerned about the safety and security of our citizens, but I have high hopes that the provisional votes will put us over the top," Malone said. "If not, we'll look at cutting where ever we can where ever we need to.”
Already working with a 20 percent city budget cut, Malone says he’s planning no more city layoffs yet. He is looking at cutting overtime vehicle use, though.
And if the final tax increase vote is still no, Malone will consider cutting hours and staffing of his fire and police departments.
It's important to recall that Portsmouth police are still scattered -- without a home until the toxic mold abatement at their City Hall headquarters is finished.
The final income tax vote results will be released May 17.
Right now, a 6/10% increase in the tax has been defeated by nine votes, but a number of provisional ballots need to be counted. Tuesday’s vote was 841-832.
Voters did approve by a comfortable margin an amendment to the City Charter which would change the residency requirements to run for mayor and city council.
In New Boston, voters there approved the renewal of a tax levy, but in voters in the Green Township School District rejected a 1% tax levy by 70 to 30%.
In Athens County, a tax levy for Athens City Schools was easily supported by voters 1427 to 664. Residents in Chauncey also gave their okay to a levy.
In Jackson County, three people were running in the Republican primary to be the Mayor of Wellston. Connie Pelletier won that race, defeating Tony Cox by seven votes
In our area, voters in Scioto, Jackson and Athens Counties are going to polls for a small number of races including mayor, council, charter amendments, and tax levies.
In the City of Portsmouth, the big issue is a proposed six-tenths of one percent increase in the city income tax.
City Council is also asking for a change in the residency requirement to run for mayor and council.
In Scioto County, there are tax levies in New Boston and the Green Local School district.
Polls are open until 7:30 p.m. Tuesday.
We will have all the results right here on WSAZ.com.