Cleveland: no longer a comic's punchline

When comedian Rich Little suggested at President Reagan's inaugural gala that the Soviets never would invade Poland if someone slipped them word that it was Cleveland, Ohioans shot off some 15,000 letters of protest, Mr. Little later formally apologized on the Johnny Carson Show.

A few weeks ago Boston Mayor Kevin H. White suggested that his great Eastern seaboard city might be slipping from a Camelot to the likes of Cleveland. Cleveland Mayor George Voinovich quickly sent east a copy of a speech he was giving on how to assess the financial soundness of any city. He also suggested that his Boston counterpart, who presides over a city enmeshed in fiscal troubles, examine Cleveland's recovery techniques and refrain from further comparisons.

Not long ago, most Clevelanders probably would have let such gibes pass. But in the last 2 1/2 years they can have been through some rough times as their city has traveled to the edge of a financial abyss and back.

In December 1978, Cleveland formally defaulted on $15 million in short-term notes owed to local banks. Its determined recovery efforts since then have drawn on the help of almost everyone in town. Neither Washington nor the state of Ohio had to bail out the city. This has given many area residents a feeling of quiet pride and confidence in their city that they hadn't had in years.

"I think we realized early on in the appraisal of the damage that we had to do it ourselves," says M. Brock Weir, chairman of AmeriTrust Corporation, the bank that held the largest number of defaulted Cleveland notes. "We didn't even get loan guarantees from the state. . . . I think there's a lot more fiscal accountability in the city of Cleveland today than there is in the US government."

Some observers point to the ballot box for the strongest signs of this newfound confidence. Warned by the mayor that more income was crucial to pay past bills, make needed city repairs, and update lagging services, city voters in February approved a one-half percent hike in the payroll tax --borne largely by suburbanites. They had turned down similar measures in the past. Voters also approved, after more than a dozen past rejections, an extension of the two-year mayoral term to four years.

In a city once known for its confrontation politics, the new wave of harmony between city officials and business and labor appears to be holding well. Shortly after defeating incumbent Democrat Dennis Kucinich, who openly admitted having little trust in the city's business leaders, Republican Mayor Voinivich called on civic leaders to examine the city's financial books and to form a task force to suggest ways to streamline city management practices. Some 650 recommendations were made -- one of them the four-year term for mayor -- and an estimated 75 percent either have been adopted or are in the process of being adopted.

"I think there's a great deal more confidence developing that business and city leaders can accomplish a lot if we just work together," says James McGowan, acting chairman of the task force and a vice-president of Ohio Bell Telephone.

Though Cleveland has lost more than 25 percent of its population during the last decade and suffers from the same loss of manufacturing jobs as other frost-belt cities, there are some encouraging signs of development in the central city. At the heart is a planned $100 million new world headquarters for Standard Oil of Ohio just off Public Square. A new medical center and a new telephone company building also are planned.

It was the agreement by eight local banks last November to convert $36.2 million of the city's short-term debt into 12-year bonds that officially brought the city out of default. That action, plus the city's new payroll tax hike, are helping enormously. New financial disciplines now in place, from a computerized accounting system to the first full audit of city books by an independent firm, should further guard against future mixing of accounts and the kind of surprise deficit which got this city into trouble in the first place.

"The default really put the spotlight on Cleveland's problems and forced us to face them and develop solutions," says city finance director William J. Reidy. "Nobody really knew how bad things were."

If you ask who deserves prime credit for Cleveland's fiscal turnaround, Mayor Voinovich usually is cast as the chief hero. Paradoxically, this former Ohio lieutenant governor at times goes out of his way to avoid the limelight. He often tries to transfer requests for press interviews to associates and once pledged to a colleague that he expected to have the "dullest" administration in the city's history. His aim: to be judged by his actions not his words.

"He's dead serious when he says he wants to keep a low profile," says one associate.

Despite their newfound pride, however, few Clevelanders assume their city is out of the woods yet financially. They know key problems linger, from a major deficit facing the city's school system to the question of whether or not Wall Street rating agencies will upgrade their bond ratings soon.

"I think Cleveland's main job is to get through the '80s in one piece, without losing too many people to the Sunbelt and to develop a bold, imaginative plan for how it's going to deal with the 1990s," says William Bryant, president of the Greater Cleveland Growth Association.

"No one here is saying, 'We're over the hill," says Richard Knight, Cleveland State University professor or urban affairs. "But people are really convinced there's a sincere effort to get the books in order. . . . There's real hope where, before, I think there was a lot of resignation."