East Cleveland Income Tax Hike Proposal Aims to Exit Fiscal Emergency

East Cleveland will ask voters on November 3, 2026, to raise the city’s income tax rate from 2% to 2.5% as officials try to end a 14-year fiscal emergency and address about $2.6 million in unpaid bills.

The proposal would add 0.5 percentage points to a rate that has remained unchanged since 1982. Based on last year’s collections, the increase could bring in roughly $970,000 a year.

The measure will appear on the general election ballot. City officials are also preparing about 500 collection lawsuits against taxpayers who owe a combined $1 million in back taxes.

Sandra Morgan described the increase as “relatively painless,” saying many people who work in the city live elsewhere and would pay the higher rate if voters approve it.

The city needs money now.

George E. Shoup III, appointed by the Ohio Court of Claims on February 4, 2026, has broad authority under a court consent order to renegotiate contracts, freeze nonessential hiring and restructure the debt. He is the only court-appointed receiver currently overseeing a city in Ohio.

“My position is not that East Cleveland should never increase taxes. Transparency needs to precede taxation, and residents need and deserve complete financial information before voting on any tax increases.”

Shoup issued that statement August 3, 2026. His warning reflects problems he identified after taking control of the city’s finances, including unreconciled bank accounts and incomplete records for the end of 2025.

The proposed rate would raise $50 per $10,000 earned

The additional charge would amount to $50 for every $10,000 earned. Supporters say the money would help restore basic services, including dependable waste collection and police staffing, which have faced strain during the insolvency.

The rate has held at 2% since 1982. The projected revenue estimate uses the previous year’s collections, while the proposed lawsuits would seek additional money from delinquent taxpayers.

Twon Billings, the city council president, has pushed for investigations into past financial mismanagement and backed efforts to recover unpaid taxes. The collection campaign would supplement, rather than replace, the ballot measure.

A receiver is rebuilding finances after years of state oversight

The city entered a state-declared fiscal emergency on October 9, 2012. It remained under that designation for 14 years as officials failed to put a workable recovery plan into effect.

The receivership followed a 2025 Ohio law allowing intervention in cities with long-running financial emergencies. Ohio Attorney General Dave Yost and Auditor Keith Faber initiated the case after the city failed to implement a viable plan over more than a decade.

In March 2026, Shoup reported a “lack of credible financial data.” He also said “the accuracy and validity of the accounting system data was in question” because transactions from mid-2023 through 2024 were missing.

The financial records had entered what officials described as a “blackout” period. Bank accounts had gone unreconciled for extended periods, and records for late 2025 were incomplete when the receiver assumed control.

Shoup’s restructuring authority reaches beyond the proposed levy. The consent order permits him to change contracts, limit hiring that he considers nonessential and reorganize the city’s $2.6 million obligation.

State money and local collections are part of the recovery effort

The proposed rate is one piece of a broader effort to stabilize operations. Juanita Brent, a Democratic state representative from Cleveland, announced $447,000 in state funding in July 2026.

“Every local dollar must stay right here in the community—filling potholes, supporting our first responders, and making our neighborhoods cleaner, safer, and stronger,” Brent said July 14, 2026.

The city’s leadership has also shifted during the financial restructuring. Lateek R. Shabazz, formerly council president, became mayor in July 2025 after former Mayor Brandon King’s conviction and a legal dispute involving interim appointee Morgan.

Shabazz initially opposed state receivership, arguing that the state commission overseeing the city had failed in its duty. He later adopted a collaborative approach toward Shoup as the restructuring moved forward.

Voters will decide the proposed 2.5% rate on November 3. Until then, the receiver’s financial review, the planned collection cases and the $447,000 state allocation will proceed alongside the campaign for new revenue.