Talk about political baptism by fire. Youngstown Mayor John A. Mc- Nally has been in office for just a month, and already he has come face-to-face with the reality of leading an aging, shrinking city.
As January came to an end, the finance department dropped a bombshell: The city’s income-tax and business-profit tax collections were a significant $2.289 million less than finance Director David Bozanich and his staff had projected.
But, that isn’t the worst of it. In early January, Bozanich revealed that city government’s year-end collection of income and profit taxes would total $42,133,700. That was less than the $44,157,000 projected at the beginning of last year.
Based on that revelation, we said in an editorial that city government is on “financial thin ice,” and that this reality could haunt Mayor McNally’s administration for the foreseeable future.
But, with the latest financial news from City Hall, that thin ice has developed a major crack.
Bozanich and Deputy Finance Director Kyle Miasek told The Vindicator that the actual collection in 2013 was $41,844,100.
What happened? It’s a question the new mayor has undoubtedly asked his finance team. City residents also would be interested to know what the projections were based on.
“There were corrections and adjustments that had to be made,” Miasek said, in explaining why the final numbers were off the mark. “We anticipated collecting a certain amount based on trends we saw during the year, but it didn’t continue at the end.”
Rather than the 4 percent increase in 2013 in income and profit tax collections (compared with 2012) that the finance department had projected, the city actually saw a 1.5 percent decline.
The actual year-end collections and the cautious projections for this year are a game-changer.
During the campaign for mayor last year, McNally seemed to anticipate that he was going to have to keep a tight rein on finances. He talked about dealing with government’s long-term financial obligations, especially the $11.9 million loan that was used to help pay for the construction of the $45 million Covelli Centre.
The finance department is planning to submit a 2014 budget to city council by mid-month, and lawmakers must approve a budget by March 31.
Bozanich has said there are no plans to lay off any city employees, but given the reality of the city’s finances, nothing should be off the table.
Public employees’ wages and benefits gobble up more than 70 percent of government’s operating budget, which means that’s where the reduction in spending must start.
The city already has one of the highest income-tax rates in the state, and most of that revenue comes from nonresidents who work in Youngstown.
City officials aren’t anticipating any major financial windfall, which means government will have to make do with a lean budget.
The administration has established a priority list for this year that will require a major commitment of dollars: hiring officers to strengthen community policing; having matching funds to attract state and federal grants for the city’s demolition program; funding economic development initiatives; and, setting aside money for a street repaving program, with special emphasis on the main arteries.
The bottom line is that the financial future is uncertain at best — and bleak at worst. The new administration does not have the luxury of a bloated treasury.
Sacrifice must be the order of the day.