Could Toledo go bankrupt?

TOLEDO - Could Toledo go bankrupt? It's happened before in another Ohio city. In the late 1970s, the state took over Cleveland when that city couldn't pay its bills.

With the Glass City more than $27 million in the hole, Councilman D. Michael Collins believes officials should take receivership more seriously.

"It's terrible, in my opinion, it's almost irreparable," said Councilman Collins.

Unlike the federal government, city and state governments cannot operate with a budget deficit, the councilman confirms to FOX Toledo News.

"We cannot say,'okay we're going to be so many dollars in the hole for this year and then we'll try to make it up next year and if we don't we'll try to make it up the year thereafter.' We can't do that."
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Budget books need to be closed each year, showing the the city has paid all its bills.

If a state auditor comes in and shows that a city does not have the money to cover payroll or provide core services, like police or fire, then the city can be declared insolvent and go into receivership.

In other words, the state over the city.

"All contracts are canceled, everything is done, and the state comes in and readjusts," Councilman Collins said.

During that time, your trash might not get picked up, or your safety could be compromised.

The state, in essence, would be building the city from scratch.

"Cleveland went into receivership in the late 1970s, and they're still struggling as a result of that experience."

How likely is it that the same could happen to Toledo?

"I can only say that we have to do everything humanly possible to avoid it," the councilman said.