Fatter City

Cleveland makes a comeback

Two years ago Cleveland was a national joke. The combative antics of 32-year-old Mayor Dennis Kucinich had outraged nearly every segment of the population, and the citizens were trying to have him recalled. The president and five members of the city council were indict ed for accepting bribes from carnival operators. The school board president was arrested for baring his bottom in public.

Schools were closed because of a teachers' strike. Worst of all, the city was un able to pay $15.5 million in debt, becoming the first major city to default on its financial obligations since the 1930s.

Cleveland is making a comeback.

During the past year, convention business has flourished, school desegregation has proceeded peacefully, and a modest construction boom has begun. For the first time in years, the Cleveland Browns even had a shot at the Super Bowl. Most impressive of all, the city last month finally dug itself out of default.

The principal architect of Cleveland's renaissance is George Voinovich, 44, the Republican former Lieutenant Governor who defeated Kucinich in last year's mayoral election. Voinovich began by patching up relations with the Cleveland business community. He persuaded major firms to donate the services of their top auditors and executives for more than four months to analyze the city's books and management problems. By April, Cleveland had balanced its budget. Voinovich persuaded local banks to refinance $10.5 million in defaulted notes last month, and in effect to loan the city another $25.7 million -- both at a fire-sale interest rate of 8 7/8. The crisis has not entirely passed.

Cleveland must pay off $111 million in debts and has announced it will lay off 214 employees in January. "This city is like a house that's been neglected for twelve years," says Voinovich. Indeed, an aging storm sewer system regularly floods Cleveland basements. Swimming pools were closed last summer because the city could not afford to fix broken plumbing. Voinovich wants to raise revenues for such maintenance needs by increasing the city income tax from 1.5% to 2%. Last week, on the second anniversary of default, the city council voted to put that proposal, even though voters defeated it in November, back on the ballot in February. Says Voinovich: "I feel like one of those rocket ships that are ready to take off. We're on the pad, but we need some fuel. "

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