Lorain County’s Financial Illusion: How One-Time Money, Payroll Expansion, and Political Gamesmanship Created a Manufactured Crisis
The numbers never lied — they were just ignored.
Oct 16, 2025
By Aaron C. Knapp, LSW | Lorain Politics Unplugged
Financial Analysis and Data by Kathryn Kennedy, MBA, CPA (Inactive)
I. The Illusion of a Crisis
Lorain County is not broke. It never was.
For years, county officials have told residents that rising costs and “unfunded mandates” were squeezing the budget. They said the Sheriff’s Office could not survive without a new sales tax. They said reserves were running out. But the numbers in their own reports tell a different story.
In 2023, according to the county’s audited financial statements, the General Fund ended the year with 57.9 million dollars in reserves. Revenues were 20.3 million dollars higher than expenses. That is not a government in crisis. That is a government with choices.
Only two years later, the same leaders who celebrated the surplus began warning of deficits. The same voices that said the county was “on solid footing” began claiming there was no money for deputies, jail staff, or infrastructure. Somewhere between the press releases and the truth, a fiscal miracle turned into a fiscal emergency.
The reality is simple. The county did not run out of money. It ran out of discipline.
From 2021 through 2024, Lorain County collected record revenues, received nearly 59 million dollars in federal relief, and enjoyed one of the strongest local economies in northern Ohio. Yet by 2025, the Board of Commissioners was again projecting shortfalls. How did that happen? The answer sits in three lines of the budget ledger: payroll, transfers, and one-time funds.
Federal aid was treated as a refillable checking account. Payroll ballooned far faster than inflation. General Fund dollars were quietly moved into projects that produced no immediate return. By the time the federal money ran out, spending habits were locked in.
Kathryn Kennedy, MBA and CPA (Inactive), spent months compiling every page of those budgets. Her 2025 analysis exposed the contradiction between the numbers and the narrative:
“Fast forward to 2023, the fund balance is very strong at 57.9 million and revenues are greater than expenses by 20.3 million. It does not appear that at that time a sales tax was needed.”
Her conclusion should have stopped the conversation. Instead, officials doubled down. They framed the same figures that once proved success as evidence of a looming collapse.
What changed was not the math. What changed was the story being told to voters.
When Kennedy reviewed the county’s cash flow projections through 2026, she saw the pattern forming: short-term windfalls were used for long-term costs, wage growth outpaced revenue, and fund transfers disguised the erosion of the General Fund. Each decision looked harmless in isolation, but together they created a budget addicted to temporary money.
By the summer of 2025, the county was borrowing from itself, shuffling balances between accounts, and selling a narrative of scarcity to justify a new tax.
It is a familiar playbook in local government. Spend freely when the grants come in, plead poverty when they expire, and convince the public that higher taxes are the only responsible answer.
The illusion works because most residents do not have time to read 200-page financial reports. They rely on headlines and hearings. Those headlines, unfortunately, are written by the same people who created the problem.
This report breaks down the numbers they would rather you ignore. It explains how a county that once held tens of millions in surplus is now asking voters for another tax. And it shows why this pattern, if left unchecked, will lead to something worse than a deficit — a permanent dependency on crisis politics.
The illusion of solvency has finally caught up with the reality of overspending. What follows is how it happened, line by line, year by year.
II. How the Surplus Became a Talking Point
In 2021, Lorain County’s elected leaders stood in front of cameras celebrating what they called “the strongest fiscal position in county history.” The fund balance had doubled since 2017, the county had no short-term debt, and the State Auditor had issued clean opinions year after year.
By 2023, the county’s General Fund reached 57.9 million dollars, more than enough to fund every major department for months even if all new revenue stopped. Yet by mid-2024, those same leaders began warning of an “impending deficit.” The change was not driven by new expenses or emergencies. It was driven by narrative.
The surplus itself had become politically inconvenient.
When voters see strong balances and healthy ledgers, it is difficult to justify tax increases. So instead of celebrating sound management, county officials began rebranding success as unsustainability.
Kathryn Kennedy explained the contradiction in her analysis:
“Revenues exceeded expenses by 20.3 million in 2023. It does not appear that at that time a sales tax was needed. The county had funds for all operating needs and a healthy reserve.”
That line matters because it collapses the entire justification for the 2025 “Public Safety” sales tax. If the county had money in 2023, the only question is how it was spent afterward.
The answer lies in the years between 2022 and 2025, when two key events reshaped the county’s budget.
The first was the arrival of nearly 59 million dollars in ARPA funds. That money was meant to offset pandemic-related losses, support public health, and strengthen infrastructure. Instead, it became a budgetary crutch. Departments used it to cover normal operating costs — payroll, overtime, and benefits.
The second event was the 13.9 million dollar loan to the Port Authority to buy the Midway Mall. That single transaction moved a huge portion of unrestricted cash out of the General Fund, replacing liquid reserves with a long-term IOU.
By the time the county released its 2024 tax budget, the tone had shifted completely. The same leadership that once touted a “rainy day cushion” was now warning of clouds. Their statements in public meetings began to emphasize “structural imbalance” and “long-term sustainability.”
Those phrases sound technical, but they hide a simple truth: the county spent money it already had and then claimed poverty when it was gone.
Kennedy called attention to the missing context:
“Expenses have outpaced receipts since 2024. The use of one-time funds to support continuing costs created the projected 2026 shortfall.”
She is right. This is not a story about a sudden collapse. It is a story about political choices that were made after the numbers already showed stability.
For Lorain County’s government, the surplus itself became a liability — proof that they did not need a tax increase. The solution was to change the story.
By mid-2025, officials were using the word “deficit” in every public setting, even though no audited report showed one. They cited “forecasted” numbers, not actual losses. They pointed to the Sheriff’s budget as the reason for a new tax, without mentioning that they had already pulled 13.9 million out of the same fund that pays for the Sheriff’s operations.
This is how fiscal language becomes political strategy. Numbers that once represented prudence are recast as problems. Choices that created the imbalance are framed as external forces. And taxpayers are told that their government has no choice but to take more from them.
The irony is that Lorain County could have maintained its surplus, funded public safety, and avoided new taxes altogether simply by following its own 2023 playbook. Instead, it redefined solvency as shortfall and turned healthy finances into a campaign prop.
The surplus didn’t disappear by accident. It was used as cover.
III. The ARPA Windfall That Became a Payroll Pipeline
When Congress passed the American Rescue Plan Act in 2021, Lorain County received a once-in-a-generation lifeline: 59.2 million dollars in federal relief.
The money arrived in two tranches, split between 2021 and 2022, with clear federal guidance that it should be used for one-time recovery projects, infrastructure, or community investment. The intent was temporary stabilization, not permanent expansion.
For a brief moment, Lorain County’s leaders had an opportunity to secure long-term value. They could have repaired aging facilities, modernized technology, or retired outstanding debt. Instead, they chose to spend large portions of it as if it were ordinary revenue.
Kathryn Kennedy identified this shift with precision:
“Using one-time funds to cover continuing expenses is never advisable and contributes to the expected budget deficit for 2026.”
Her review of county budgets showed that by 2024, roughly 6.1 million dollars in remaining ARPA funds were used to fill departmental requests that otherwise would have required budget hearings or cuts. Those funds covered salaries, benefits, and general operations. In other words, they became part of the payroll pipeline.
Once those wages were raised, they stayed raised.
When the federal money ran out, the cost remained.
Between 2021 and 2024, the number of county employees earning 100,000 dollars or more more than doubled, from 65 to 154. Total payroll rose from 102.1 million in 2021 to 113.5 million in 2023, then to 119.8 million in 2024, and an estimated 131 million in 2025.
That is an increase of nearly 30 percent in four years, far beyond inflation.
Kennedy drew a direct line between those increases and the projected deficit:
“It appears the budget issues may be directly attributed to the large increases in wages and salaries. In the private sector, wages typically increase about two percent annually.”
ARPA temporarily masked the problem, but it also created expectations. Departments that received extra funding one year expected the same the next. Raises given during the relief years became permanent obligations. And because the county had used federal aid to meet those obligations, the General Fund had to absorb them once the aid expired.
The political messaging never mentioned that part. When commissioners described the upcoming shortfall, they spoke of “rising costs” and “inflationary pressures.” They did not mention that many of those costs were self-inflicted by decisions made when the books were flush.
In effect, Lorain County converted emergency relief into structural liability.
The money meant to help the county recover from crisis became the very reason it now claims to be in one.
The real irony is that some of those same federal funds were still being celebrated in press releases as “transformational investments,” even while the administration privately used them to plug recurring holes. It looked like growth on paper, but it was growth built on sand.
The illusion held only as long as the federal pipeline flowed.
By 2025, the last ARPA dollars were nearly gone, leaving behind an inflated payroll and a new talking point: the county was “out of options.”
It was not out of options. It was out of temporary money.
IV. The 13.9 Million Dollar Mall Mirage
In January 2023, the Lorain County Board of Commissioners approved a 13.9 million dollar transfer from the General Fund to the Port Authority to buy the failing Midway Mall. It was sold to the public as a “strategic investment” that would bring redevelopment, jobs, and new tax revenue.
What it really did was move nearly fourteen million dollars of unrestricted public money into an account that no longer belongs to the public.
The transaction was structured as a loan, but not in the traditional sense. The Port Authority, which is a separate entity, owes the county repayment only after the property is resold or redeveloped. No timeline was set. No collateral was required. No independent appraisal was attached to the purchase at closing.
Kathryn Kennedy summarized the arrangement in her review:
“The 20 million previously set aside for the jail and the expected receipt of the 13.9 million plus interest for the sale of the mall could be used for matching funds. In effect, the county does have the funds for the sheriff’s office and jail operations but it appears they want to use General Fund dollars for mega-site development.”
Her conclusion is blunt: the county had the money to fund the Sheriff and the jail. It just chose to park it in a politically convenient redevelopment project.
More than two years later, the redevelopment has not moved forward. The Port Authority has not resold the property. There is no evidence of new tax revenue. What remains is a massive drawdown from the General Fund that has produced no measurable return.
When you follow the numbers, it becomes clear that the 13.9 million dollar mall purchase and the “public safety deficit” narrative are two sides of the same coin. The county cannot claim a shortage in the Sheriff’s budget while sitting on an IOU for nearly the same amount.
The connection becomes more troubling when you consider timing. In December 2022, just one month before the mall deal, the commissioners voted to earmark 20 million dollars in General Fund money for future jail construction. That money was set aside specifically for public safety capital needs.
In less than sixty days, the county shifted from reserving funds for a jail to loaning them out for a mall.
By mid-2024, when the Board began discussing a “public safety tax,” there was little mention of that sequence of decisions. Instead, the conversation focused on “unfunded needs” and “structural pressures,” without explaining how those pressures had been created.
Kennedy questioned that logic directly:
“Why not just say that? If the county has the funds, the voters deserve to know where those funds are being used.”
That question still has not been answered.
In simple terms, the mall loan turned real money into paper money. It was a shell game that weakened liquidity and created a manufactured justification for new taxes. The funds that could have sustained public safety were diverted to a speculative real estate play.
The loan might eventually be repaid, but the damage to fiscal stability is already done. Every day that 13.9 million dollars sits idle is another day the county insists it needs more from taxpayers.
It is not a funding crisis. It is a credibility crisis.
V. The Sheriff’s Office and the Manufactured “Public Safety” Shortfall
If Lorain County’s books tell one story, the political messaging tells another.
On paper, there was no shortfall. There was a surplus. Yet by 2025, the Sheriff’s Office had been recast as the face of fiscal desperation — a department portrayed as “underfunded” and “on the brink.”
The numbers simply do not support that narrative.
When the county first began discussing the “Public Safety Sales Tax” proposal, officials said the Sheriff’s Office needed new revenue to remain operational. They presented the tax as a matter of safety, not politics. But the data shows that the so-called deficit aligns almost perfectly with the amount of money removed from the General Fund for the 13.9 million dollar mall loan.
It is not coincidence. It is cause and effect.
Kathryn Kennedy’s analysis exposes the contradiction:
“The 20 million previously set aside for the jail and the expected receipt of the 13.9 million plus interest for the sale of the mall could be used for matching funds. In effect, the county does have the funds for the sheriff’s office and jail operations but it appears they want to use General Fund dollars for mega-site development.”
She is correct. The county already had money for public safety. It simply chose to move it elsewhere.
That decision turned the Sheriff’s Office into a talking point — the emotional centerpiece of a campaign for a new tax that residents never needed to pay.
At community meetings, officials described deputies stretched thin, jail staffing in crisis, and mounting costs that “could no longer be sustained.” Those statements were never supported by the county’s own audited records.
At the same time, the Port Authority and political leadership were sitting on 13.9 million dollars of idle cash tied up in the mall property.
That money could have fully stabilized the Sheriff’s Office budget through 2026. Instead, it was earmarked for redevelopment schemes and consulting contracts that benefited a select few.
The question of who benefited from the mall sale? THIS is the question that exposes everything.
The beneficiaries were not the deputies who patrol the streets.
They were the bureaucracies and political players who gained power from controlling the mall’s future.
The Lorain County Port Authority was handed an asset bought entirely with taxpayer money but shielded from the public’s reach. It gained land, leverage, and funding without having to raise a single dollar of its own.
Consultants and planners attached to the project were paid regardless of whether redevelopment ever occurred.
The commissioners who voted for the transfer were able to promote it as “economic progress” while simultaneously pointing to “budget constraints” as justification for a new tax.
And because the Port Authority operates independently, the entire deal effectively removed 13.9 million dollars from public oversight.
Meanwhile, the Sheriff’s Office became the convenient symbol of need.
Instead of asking why 13.9 million dollars in unrestricted money was no longer available, voters were told to fix the problem themselves through a new 0.25 percent sales tax.
The result is what Kennedy called a manufactured deficit — a shortfall created by deliberate reallocation, not by external forces or economic downturn.
The proposed “public safety tax” is projected to raise roughly 13 million dollars a year.
That figure is not random. It is almost identical to the 13.9 million dollars loaned to the Port Authority.
If the county had simply left the money where it was, no tax increase would have been necessary.
To the public, this looks like coincidence.
To anyone who understands municipal finance, it looks like strategy.
By diverting the money and then crying shortage, county officials created a cycle of justification.
The Sheriff’s Office was cast as the victim of a financial drought that their own leadership caused.
Now the same leadership is selling taxpayers the cure for a disease of their own making.
Kennedy’s conclusion is impossible to ignore:
“Full disclosure of all expected county spending is required for voters to make an informed decision on the proposed sales tax increase.”
That disclosure has never been provided.
What exists instead is a carefully controlled narrative that presents the Sheriff as a beggar when the real beggars are the politicians who squandered the surplus.
They have turned law enforcement into a prop in their budget theater.
The public is being asked to underwrite the consequences of political vanity, not public safety needs.
If 13.9 million dollars can fund consultants and speculative development, it can fund deputies.
The crisis is not fiscal. It is ethical.
To Be Continued: The Cost of a Manufactured Crisis
Lorain County’s leadership has turned abundance into alarm.
They took a surplus built over years of steady growth and spent it down through short-sighted transfers, speculative projects, and unchecked wage growth. Then, when the numbers no longer balanced on paper, they told the public the money had vanished.
Kathryn Kennedy’s financial analysis makes one fact impossible to ignore: the county was never in crisis.
There was no fiscal collapse, no unforeseen emergency, and no external event that emptied the General Fund.
The shortfall was a choice. The crisis was a script.
At the center of that script stands the Sheriff’s Office — not as the cause of the problem, but as the character cast to carry it.
While millions sit frozen in a mall property that has produced nothing, deputies and jail staff are being used to sell a story about “public safety” that hides political convenience.
The commissioners shifted the money, shifted the blame, and shifted the narrative.
This is how a government manufactures consent for higher taxes.
It creates a crisis, blames someone else, and markets the cure as civic duty.
The numbers, however, do not lie. They tell the truth about what was taken, who gained control of it, and why residents are being told to replace it.
The Port Authority holds the cash.
The commissioners hold the script.
And the Sheriff holds the blame.
The only people who lost anything are the taxpayers.
Next: Part Two — What Comes Next and Why It Matters
In the next installment, we follow the money forward — through payroll inflation, the mega-site project, and the growing trust gap between Lorain County’s government and its residents.
We will look at how the same financial playbook used for the mall deal is now shaping every major budget decision, and how unchecked political spending is pushing the county toward a real, lasting deficit.
Part Two will show how the illusion becomes policy, and why that path leads to long-term financial ruin.
Coming soon on Lorain Politics Unplugged.
Authorship, Legal, and Transparency Notice
All written content in this article was authored by Aaron C. Knapp, LSW, for Lorain Politics Unplugged.
All quoted materials and figures are taken from verified public records, audited county financial statements, and the independent analysis of Kathryn Kennedy, MBA, CPA (Inactive), whose work is cited throughout.
Artificial intelligence tools were used only for research assistance, data synthesis, and layout support.
All narrative, legal commentary, and stylistic composition are original works of the author.
Images and illustrations accompanying this series may include AI-generated visuals for conceptual or editorial purposes only.
This publication is intended for journalistic and educational use under Ohio public records and fair comment law.
It does not constitute legal, financial, or professional advice. Readers are encouraged to review cited documents and draw their own conclusions.
About The Author
