By Karl Henkel
Girard, Youngstown and V&M Star are squabbling over the taxation of some V&M workers.
The quandary involves the location where some workers conduct business — either in an area of a cooperative agreement between Youngstown and Girard or solely in the city of Girard — and how they should be taxed.
James Melfi, Girard mayor, told The Vindicator he believes workers at the former Indalex Inc. site, which is part of Girard, should be taxed at the city’s 2 percent income-tax rate.
But Melfi said those workers have fallen under the agreement’s tax rate of 2.75 percent, which is then split between Youngstown and Girard.
“Those dollars should [all] be coming to Girard,” said Melfi. “They are not coming to Girard.”
V&M says that the workers should be taxed according to the agreement.
“V&M employees who have been permanently assigned to the facility will be taxed at the applicable city of Girard rate,” said V&M spokesman Vince Bevacqua.
“V&M employees who temporarily work on the Girard site — and otherwise in the cooperative zone property — are taxed by Youngstown, and the revenue is shared by both cities under the terms of the cooperative agreement.”
Melfi points to a Girard ordinance that states income tax should be levied “on all salaries, wages, commissions and other compensation earned ... by nonresidents for work done or services performed or rendered in the city of Girard.”
V&M’s current operating site is part of Youngstown. Its new $650 million mill, as well as the recently announced $57 million VAM USA LLC pipe-thread plant, are part of the cooperative- agreement area.
During the construction process of those two facilities, Girard is supposed to receive 55 percent of all income taxes, up to $3 million, that are based on the Youngstown income-tax rate of 2.75 percent.
Once that $3 million threshold is met, Youngstown and Girard will split the income taxes evenly.
Taxes are collected by the Regional Income Tax Agency and disbursed to Youngstown and then Girard.
Since the beginning of the V&M expansion project in June 2010 through November, income tax collected totals $753,150, Youngstown officials said.
Tax revenues for Girard totaled $414,232; Youngstown’s share was $338,918.
But the issue, Melfi said, doesn’t involve the taxation inside the area of cooperation but outside it.
Indalex, an approximate 10-acre area, is part of Girard, not part of the area of the agreement.
“That property will never be annexed out of Girard, as long as I’m sitting in this seat,” Melfi said.
Workers who conduct business at that site should be taxed at Girard’s income-tax rate of 2 percent, Melfi said, and none of that revenue should pass through Youngstown.
But Melfi said it appears those workers are being taxed at the 2.75 percent rate, which means under the agreement, Girard receives only 1.51 percent of taxes.
Melfi said he isn’t sure how much tax revenue Girard has lost out on and said he expects to receive a lump-sum payment from Youngstown for the lost revenue.
Youngstown Finance Director David Bozanich declined to elaborate on the situation and deferred comment to RITA.
RITA did not immediately respond to a Vindicator inquiry.
Melfi discovered the possible tax snafu earlier this fall and said he understands that the cooperative-agreement process is relatively new but said it’s important that the city tax ordinance be enforced.
“That’s why we’ve given them all this time to work this out,” he said. “It’s not something we are rushing or demanding today.”
Melfi said it is especially important that this situation gets rectified, because the city is still trying to make up for the $300,000 in city income taxes it lost when Indalex closed in 2007.