Auditor: Lorain's budget to remain positive for 2025 but fiscal uncertainty looms

LORAIN — Lorain will remain in the black this year, but faces financial uncertainty moving forward, its auditor said on Monday during a Finance and Claims committee meeting. Auditor Joseph Koziura said he expects to end next year in the black but fears a fiscal shortfall by 2027. Between encumbrances and the difference between its revenue and expenses, the city will spend more than $4 million against its cash balance to stay afloat this year. A $5.1 million carryover will be split between a $2.1 million set aside for the city's rainy day fund and just shy of $3 million carried over free and clear to the general fund. Going into the final quarter of 2025, Koziura estimated the city's general fund revenue would come in just under $34 million, and its expenses at about $36 million. The difference between its expenses and revenue will be covered by the city's cash balance. "I think we're at the crossroads," Koziura said, noting 2026 will mark contract negotiations for the bulk of Lorain's unions. "... The numbers don't lie." According to a budget performance report through Sept. 30, the treasurer's office collected about 80 percent of its budgeted revenue — or $33.9 million for the general fund, while its various departments' spending was underbudget at 71 percent of its estimates, or about $31.6 million. "This year we're going to spend more than we're taking in," Koziura said. "The city is facing financial difficulty." Mayor Jack Bradley noted as of the end of September, the city's budget was $2.3 million "to the good," and hoped the positive trend would continue through the end of the year. Councilwoman Mary Springowski, D-at Large, said the city must do something to get its expenses under control — as they have steadily ticked upward for the past several years — and increase its revenue streams through economic development. She said the city must think outside the box, including potentially enticing offices or jobs leaving downtown Cleveland to come to Lorain. "We're on track to become a bedroom community," she warned, adding the city and school district are Lorain's largest employers despite it being the ninth-largest city in the state. She warned the city must boost its revenue, lest it throw in the towel and be on a trajectory to become "another East Cleveland." At the end of September, the state began proceedings to place East Cleveland under a receivership after the inner-ring suburb had spent decades in fiscal emergency. Sylvia DuVall, D-at Large, questioned if there were revenue opportunities the city was not taking advantage of, such as correctly taxing all its short-term rental properties. Treasurer Terri Soto said her office has worked closely with the Building, Housing and Planning Department to ensure short-term rentals have registered properly with the city and are paying all applicable taxes and fees. Pam Carter, D-3rd Ward, asked if there were any economic development projects on the horizon that could boost the city's tax base. To answer her question, Bradley first noted the city has had the highest level of income in its history the past few years — higher than when U.S. Steel, Ford and American Shipyards were at full capacity, he said. In the same vein, it has also never spent so much money as it had before, he said. "We are working (with) developers who want to come into the city and do economic development, but its not an easy process," Bradley said. The city has several brownfield sites, including the former steel mill, old National Gypsum plant, and the Stein property next to the East 28th Street mills that could be home to new investment, he said. He implored residents to keep a positive outlook, pointing to the redevelopment at the former Pellet Terminal site as an example. The Pellet Terminal is part of the city's waterfront redevelopment, which includes green space on the Finger Piers, a walking path connecting it to Black River Landing and upgrades to Hot Waters public boat launch. "We can talk about what it says on paper now, but we can also look to the future and see that good things are happening in this city and good things are going to continue to happen in this city," he said. This story has been corrected to reflect the city's end of year estimates. Contact Carissa Woytach at (440) 329-7245 or cwoytach@chroniclet.com.