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.

Audits in Progress
Ohio’s Auditor should finish the 2023 audit soon; no major surprises expected.
The city must file a few items before submitting its 2024 audit, after which the 2025 audit will follow.
Moody’s removed Cleveland Heights’ “A1” rating, leaving the city with no credit score until audits are complete.
Unexpected Bills
Mayor Jim Petras revealed a surprise bill of nearly $850,000 this year:
$400,000 invoice from apartment developer Flaherty & Collins (not in budget).
$340,000 lawsuit judgment from out‑of‑state landlords who paid extra for occupancy certificates.
The city is scrambling to fit these costs into its budget without dipping into a $20 million cash reserve.
Fiscal Safeguards
Council Vice President Gail Larson asked how much of the general fund should stay untouched for safety and credit.
Finance director recommends a 20‑30 % cushion of annual operating expenses; the city sits at ~26 %.
A new rule for nonprofit funding will start with $20,000 from the discretionary account and could cover larger requests (e.g., Future Heights or Cleveland Heights For Immigrant Rights).

Nonprofit Funding Rules
Councilwoman Jessica Cohen supports clear expectations for nonprofits.
Councilwoman Sarah Stone notes that state arts councils require post‑event reports before reimbursement; future funding may be refused for non‑reporting organizations.
Contract Transparency
A team led by former assistant finance director Rachun Caldwell is listing contracts < $50,000 that need no council approval.
These will be posted on the city’s website; the administration is close to finishing this list.
No central repository exists yet; over 100 city funds will be trimmed to simplify accounting.
Revenue Highlights
January: $200,000 from adult cannabis taxes; a second payment of $10,000–$12,000.
Extra $161,000 from local fees and permits.
Overall cash fell by $17.5 million this year versus last year, mainly due to spending down American Rescue Plan Act funds.
All remaining pandemic relief money must be used by 2026, even though the city received over $38 million from federal sources.