CLEVELAND BUDGET PERPLEX: In response to my last entry, Mark Schumann comments:

But then you've got the old raising-taxes-in-a-recession problem. That's not good either. You can't push the payroll tax any higher, can you?

I think the answer is "Maybe yes, a little bit, temporarily, as an absolute last resort, if the alternative is laying off cops and firefighters". Which, Mark will note, is a highly political frame for the issue... but one which I think reflects reality.

Let me try walking through this step by step:

1) The huge increases in City workforce cited by Crain's and Roldo are mostly fictitious. I went to the library and got the actual employment figures for General Fund departments (not just General fund employees) for the last ten years, and here's what I found:
... The City added a total of about 600 full-time-equivalent positions from 1992 to 2002.
... About 150 of these FTE positions were in Muny Court.
... About 600 FTE positions were added in the Public Safety Department... including 200 police patrol officers, 60 firefighters, and 95 "institutional guards".
... All the other General Fund departments combined lost about 170 FTE positions from 1992 to 2002.

I don't have a clue what the extra Muny Court workers are doing or for how much, but for the sake of argument let's just say they're expendable. At $50,000 per slot, firing them all would save the City $7.5 million. That still leaves more than $42 million in projected deficit to be dealt with (and 150 newly unemployed people on the street).

Now what?

2) The Mayor and her staffers all just took voluntary pay cuts. Let's assume they can get all the non-civil service managers to do this. And that they find unnoticed cash lying around in a few more corners. And that they manage to get the firefighters to back down on overtime. Let's be wildly optimistic and say this all adds up to $6 or $7 million.

Now we're only short $35 million. What's next?

3) What's next is... cutting uniformed safety personnel, and/or a whole lot of part-time recreation and service workers. Which means, in turn -- no swimming pools or rec leagues next summer. No vacant lots mowed. Slower police response. Maybe a fire station or two shut down.

And... hundreds more laid-off City workers on the street.

4) City residents will recognize the scenario outlined above as a sure-fire recipe for starting "the war of all against all"... angry unions, angry residents, furious Councilmen, municipal paralysis from now till November 2005. At which point we get a new Mayor -- probably just in time for recovering revenues to make him or her look like a genius.

As a City resident who prefers my local government to be functional, I'd rather avoid this municipal hellmouth, especially since nobody in Cleveland is really to blame for lower tax revenue. I don't care all that much if Campbell gets a second term, but I don't want the rest of her first term to be a total waste. That might be convenient for prospective opponents, but it would be very inconvenient for the rest of us.

5) So here's what I think Campbell should try:

First, go ahead and shake down every department for maximum non-personnel savings for next year. Be tough about it. Go after the fire overtime. Trim trim trim.

When that's done, and everyone has a good idea what the remaining deficit is gonna be, propose the following deal to the City unions, Council and the voters:

-- No layoffs, but...

-- All City employees, across the board, take a small pay reduction from April through December, enough to cover half the deficit. But this is conditional on...

-- Voter approval of a temporary income tax increase in March, lasting until the end of the year and sufficient to cover the other half. (A quarter-percent increase, for example, would raise $20-25 million over nine months.)

The deal would be a package. If any part of it failed, layoffs would ensue as needed, beginning April 1.

Also part of the deal would be measures to give back some of the tax hike through reductions in other City charges that don't affect the General Fund. First on my list would be an immediate 10% reduction in Cleveland Public Power rates. The City should also look for ways to reduce downtown workers' costs, e.g. cheaper parking options.

6) What would this accomplish? It would be a way to avoid wholesale layoffs, service cuts, and disfunctional government for what might well be the last year of really depressed tax collections. Everyone cooperates, nobody gets hurt too badly, city life doesn't collapse, and we're all still friends. If things are just as bad the following year (which is totally unpredictable) "we'll climb that hill... when we get up to it."

7) Would a tax increase of this kind hurt the local economy? No. It's temporary, it's small, it buys civic peace and cooperation, it's accompanied by some cost savings, it would be great for the city's reputation if Campbell could pull it off. The alternative is more disarray, more political warfare, and more unemployment.

8) Could she pull it off? That's a whole other question. It would be the performance of a lifetime, with a very high risk of failure -- lots of agendas to juggle, very complicated. Layoffs and service cuts would be simpler... but IMHO, a lot more destructive to both the Administration and the city.

9) One final non-pragmatic point: I think most Cleveland residents, being blue-collar, think private employers should make an effort to keep their employees working through temporary slumps, if at all possible. That's one mark of a "good place to work." We respect bosses who temper their desire to maximize profit and minimize loss with a sense of loyalty and fairness to their employees. We know this kind of boss is going to have a more loyal, more productive workforce in the long run.

Well, in this case, we're the boss. What kind of boss are we going to be?