Girard mayor to seek audit of shared tax revenue from V&M Star expansion

Published: Sat, December 1, 2012 @ 12:03 a.m.

By danny restivo


City officials will seek a state audit to ensure an accurate amount of revenue sharing occurred between Youngstown and Girard during the V&M Star expansion project.

Mayor James Melfi said the city has received roughly $1.3 million from income-tax on wages during construction. He said V&M told the city it would receive roughly $3 million from the entire construction process.

Melfi said he would have requested the audit in any event, but the amount of tax revenue Girard received during the construction phase has raised a concern.

“We were waiting for the construction portion to finalize before raising any questions,” the mayor said.

Production at the new facility began in October. With limited construction remaining, the city expects to receive up to $1.5 million in total wage revenue.

During the negotiation process, V&M officials said the project could create $5.5 million in tax revenue during the construction. Based on the joint economic agreement, Girard and Youngstown agreed that Girard would receive 55 percent of the income tax revenue, while Youngstown would take 45 percent of the first $3 million. The two entities would then split evenly any revenue above $3 million. Melfi said the agreement stipulates that V&M would direct all income-tax revenue to Youngstown, which would dole out the appropriate amount to Girard.

Numbers provided by the Youngstown Finance Department show the city has collected roughly $2,390,000 in taxes on construction wages thus far. With the 45-55 split, roughly $1,314,000 went to Girard, while approximately $1,075,000 remained with Youngstown. Youngstown estimates the total revenue from construction-tax wages will hover around $2.7 million, which means Youngstown would have received $1,150,000 throughout the $650 million expansion phase.

Melfi hopes the audit also will review the two municipalities profit-sharing agreement. It stipulates that if V&M reaches a $1 million threshold at the new facility, the two cities will split the additional revenue evenly.

He said he would like the state auditor to look at any permit fees as well, but his main concern is accounting for all the construction wages that were divvied up between the two cities.

Melfi said he plans on writing a request to the auditor in the coming weeks.

A spokesman for the state auditor’s office confirmed that the state could review an economic agreement between two municipalities. The review would include looking at the joint economic district contract before performing a regular financial audit.

“I have a lot of confidence in [Youngstown] Mayor [Charles] Sammarone in making sure things are done right,” Melfi said. “We just need to make sure the citizens of Girard and the city of Girard receives every dollar from this project.”

Sammarone and Dave Bozanich, city finance director, did not respond Friday to The Vindicator’s phone calls.

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