At the end of the year, Cleveland City Council can transfer leftover money from one department, division or purpose to another. In 2023, Cleveland had $56,564,200 left over from the operating budget passed in March to redirect to other city projects.
The city uses a combination of transfer, supplementary and temporary ordinances to balance its checkbook at the end of each calendar year.
Transfer ordinance: An accounting measure required by state law to balance the books of individual city departments
As part of the transfer ordinance, council moved $18 million of unspent money from one part of the budget to another to balance out the individual department accounts.
“Everything we’re doing in the transfer ordinances is within the confines of what was in the 2023 operating budget. We’re moving money from one division to another … to ensure that each of those divisions ends the year with a balanced budget or position balance,” said Ahmed Abonamah, the city’s finance director.
Supplemental ordinance: Allows the city to spend unspent money left over from the previous year’s budget
From the unspent $56 million, City Council approved transferring $45 million to the General Fund and $11 million to the Special Revenue Fund.
That leaves about $25 million that council and the mayor will have to figure out how to spend next year. City Council must still pass separate ordinances to actually spend the money in 2024.
At a recent council committee meeting, Abonamah requested that money be “supplementally appropriated” to the General Fund for capital projects, which include $10 million to the West Side Market and $10 million to street resurfacing.
“It’s a balancing act. We’re always trying to balance current needs with future needs,” said Abonamah.
One of the most common reasons for a surplus in the city budget is job vacancies.
There are roughly 800 job vacancies with the city, according to Abonamah. The city has more than 7,000 positions.
City Council approved a new human resources management system in 2021. The city got approval to spend $10 million of the 2023 budget surplus toward that system. The new HR system is expected to expedite hiring for city employees, according to City Council President Blaine Griffin.
A number of council members balked at the $10 million price tag, including Michael Polensek and Kris Harsh. “Who’s making it, Rolls Royce?” asked Polensek.
“This project is expensive. There’s no question. It’s essential if we want to turn City Hall into a modern operation,” said Abonamah.
Temporary ordinance: A stopgap measure to fund the city until the budget is approved each year in the spring
A temporary ordinance gives the city authority to spend from Jan. 1, 2024, until the final budget is adopted on April 1, 2024.
During the meeting, Interim Finance Manager Nicole Gallagher said the money would be used to help with wage increases and retroactive pay for city employees in various departments.
Rainy Day Revenue Fund: A pot of money that City Council can tap for emergencies
The city routinely stashes money in its Rainy Day Revenue Fund for an economic downturn or one-time expenses. In 2022, the city added $20 million to the fund, bringing the total to a record-breaking $65 million.
Council did not touch the fund in 2022 and is not increasing the fund in 2023, according to Abonamah.
Council Member Richard Starr expressed concern about the budget surplus and the city’s process for transferring funds, citing persistent unmet resident needs.
Starr amplified a recent example of houses that haven’t been demolished because the Department of Building and Housing doesn’t have the money to complete the task.
“[During the] very last council meeting of the year, we’re talking about transferring $56 million. It’s odd to me that we have … a surplus of cash available,” said Starr, who said he is determined to “challenge the status quo” in 2024.
When Starr asked Abonamah to say what the 2022 budget surplus was, he said he couldn’t recall.
“With all due respect to everyone at the table, it be nothing but B.S. going on. And I’m tired of the B.S.” said Starr.
(Note: This story has been updated to clarify the differences between the transfer ordinance and the supplemental ordinance.)
