YOUNGSTOWN — The city’s financial struggles from the COVID-19 pandemic are far from over, with its latest income tax collection better than only two months in at least the past two years.

“There is a large concern,” said Kyle Miasek, interim finance director. “The problem this year could be worse than in 2020.”

The city’s income tax collection for November was $3,325,767. The payments for that month were made this month as businesses have 30 days or so from the end of November to remit the taxes to the city.

The only months that were worse for collections in the past two years were April 2020 with $3,145,500 — when numerous business were initially forced to shut down or restrict customer access by the state because of the pandemic — and $3,285,000 in August 2020.

Youngstown’s best collection month in the past two years was $5,092,100 in March 2019.

To see how much of an impact the pandemic has had on the city’s income tax collections, compare what the city collected this past November to the two previous years. This past November’s amount was $3,325,767. It was $4,172,800 in November 2019 and $4,515,800 in November 2018.

The city was close to its targeted amounts during the first four months of collections in 2020 — which would be November and December 2019 and January and February 2020 because of the time lag businesses have to pay the taxes.

PANDEMIC BLUES

But it experienced a significant decline once the pandemic hit.

Collections for 2020 from the city’s 2.75 percent income tax were $43,866,000, which was $2,348,000 under its projection. It was also $2,798,000 less than the $46,664,000 collected in 2019.

Miasek is working on income-tax collection projections for the city along with the 2021 budget, which must be approved by March 31 by city council. Income tax collected this year is expected to be around $43 million to $43.5 million.

“We had four healthy months last year,” Miasek said. “If we have COVID levels of collections this year, we’ll have less than in 2020. Income tax will be less than last year. We can’t forecast a recovery in jobs.”

The sharp decline in income tax collections last year was offset by a number of large boosts of money the city received — primarily $5.3 million in federal COVID-19 relief funds and a $2.8 million workers’ compensation rebate. Miasek said state officials have said there won’t be a workers’ compensation rebate this year and federal COVID-19 relief is uncertain.

The city also saved $400,000 from voluntary employee furloughs last year and another $400,000 in a reduction in spending.

That left the city starting this year with a surplus of about $6.5 million in its general fund, the most in recent memory.

But it won’t last long, Miasek said.

“We’ll need to use half the surplus to balance 2021,” he said. “We’ll need that money to right-size government if this is our new tax base. We don’t know what the future holds. If things improve, great. If not, we have to be prepared. We have to use those reserves wisely in preparation of how the future job market will be in the city.”

‘BARE BONES’

Councilwoman Lauren McNally, D-5th Ward, chairwoman of the finance committee, said: “2021 is not going to be easy. We can only set aside so much money for the future. We already run bare bones. What we collect, we spend because we have to. We don’t have many places left to make cuts.”

She added: “Had it not been for the bailout funds, we wouldn’t have balanced our budget last year or this year. Going into this year’s budget, we’re not going to do much with new equipment. We’ll re-evaluate that six months down the line if things change with a stimulus package.”

The city is going to budget this year with the expectation it won’t receive additional federal or state funding to help its financial situation, McNally said.

Miasek also said he continues to be concerned about a proposal to repeal a change in state law that allows municipalities that collect income tax to continue to do that from people working there but are now working from home during the pandemic.

Youngstown gets about 85 percent of its income tax from those who work in the city and live outside of it, he said.

If the city had to refund that money and / or no longer be allowed to collect it, it would mean a substantial loss of income, Miasek said.

dskolnick@tribtoday.com