City income-tax collections dropped by $2.4M in 2012
The city’s income-tax collections for 2012 were $2,428,300 less than budgeted, but city admin- istration officials say Youngstown’s finances this year are in good shape.
The city received $42,471,700 in income tax for 2012. The projected collection amount was $44.9 million. That’s a 5.4 percent decline.
“It’s a projection,” city Finance Director David Bozanich said about what they had expected to collect.
The collection amount was also less than the $43,948,900 the city received in income tax in 2011.
Projections in previous years also have been off.
The projected collection amount in 2011 was $41,750,000. The city received more than $2 million over that estimate.
Bozanich said his office is reviewing income tax amounts it received for employees of various companies in Youngstown to see what caused the decline.
Income tax is the single largest source of revenue for the city.
Despite the drop, Bozanich said Monday at city council’s first 2013 budget hearing that he expects income tax collections to increase by 2 percent to 3 percent this year compared to 2012.
A 2 percent increase would be $43,321,134, and a 3 percent increase would be $43,745,851. Both would be less than what the city received in income tax in 2011.
Council members didn’t ask Bozanich for an explanation at Monday’s budget hearing about the decline in income tax collections compared to the projected amount.
City council must pass a 2013 budget no later than the end of March.
The city receives income tax revenue from a 2.75 percent tax it imposes on those who work and/or live in the city and a 2.75 percent profit tax paid by companies.
Over the past decade, income tax peaked in 2007 at $46,781,201. It dropped a bit the next year to $46,430,600, and bottomed out in 2009, when the national recession hit, at $40,533,700.
The city made adjustments in spending and revenue each year so as not to finish with a deficit.
Even with a decline in income tax in 2012, the city’s general fund ended with a $265,188 surplus.
Other revenue, including money from V&M Star, which is finishing a $1.1 billion expansion project, as well as an early-retirement buyout of 53 city employees helped offset the reduction in income tax, Bozanich said.
When an employee leaves, only those positions that are “absolutely essential to providing service to taxpayers” are filled, said DeMaine Kitchen, the mayor’s secretary/chief of staff. Most of the replacements are hired at a lower starting salary, Bozanich said.
In recent years, the city has laid off employees and cut programs such as summer youth recreation to help balance the budget.
But Bozanich said that isn’t necessary this year, and as long as expenses remain the same as they were in 2012, the city will be fine financially in 2013.