Just days after he was sworn into office, Mayor John A. McNally was confronted with a reality that could haunt his administration for the foreseeable future: Youngstown government is on financial thin ice.
But if there’s a silver lining in this dark cloud, it is that the $2 million revenue shortfall in 2013 gives the new mayor the ability to tell city workers that pay raises are off the table in the labor negotiations.
It should come as no surprise that unions attempt to take advantage of a new administration, especially during contract talks, which is why it helps for the mayor to be able to say, “The cupboard is just about bare.”
And before the unions argue that the city does have the $2.86 million it received from Vallourec Star earlier this month, here’s a reality check: the payment from the steel pipe-making company will be reduced to $100,000 a year for 96 years starting in 2016.
In other words, the three checks — last year, this year and next year — represent “one-time” money that should not be used for such things as payroll and other long-term obligations.
The same goes for the $1 million in unanticipated revenues last year.
KEEPING TIGHT REIN ON SPENDING
Mayor McNally, who ran on a platform of dealing with the city’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, will have to keep a tight rein on spending as he figures out what to do about the revenue shortfall.
In 2013, the city had projected collecting $44.15 million in income and business profit taxes, but actually received $42.13 million. The shortage was the result of companies not being as profitable as the city thought they would be.
McNally is absolutely right in erring on the side of caution when spending taxpayer dollars.
Youngstown government’s financial future is uncertain at best. Thus, revenue projections should be on the conservative side.
And that means spending priorities must be established that address the most pressing problems in a city that has a declining population, stagnant tax base, an intractable crime problem and deteriorating neighborhoods.
During the campaign, McNally said that one of his priorities would be the demolition of dilapidated and abandoned houses.
His predecessor, Charles Sammarone, now president of council, tore down more structures in the two years and four months he was in office than mayors before him.
McNally wants to expand the demolition program, which means dedicating more money than had been spent previously.