By DAVID SKOLNICK

Staff writer

YOUNGSTOWN — The city plans to resolve a huge financial problem listed in its last two state audits by having its general fund reimburse $4.4 million to three other funds.

The 2017 and 2018 audits, both released in 2019, state the city improperly spent $4,415,332 from its water fund ($2,653,169), wastewater fund ($1,612,163) and environmental sanitation fund ($150,000), primarily for economic development. Also, the auditor allowed the city to have the general fund reimburse the three funds over a 15-year period.

The city has objected to that plan, with Mayor Jamael Tito Brown saying on a number of occasions the state auditor would have to take Youngstown to court to get the money.

But because of $5.3 million in federal COVID-19 relief funds given to the city last year and $88,629,500 in additional federal COVID-19 relief money coming to Youngstown in two equal installments — on May 10 and then May 10, 2022 — the municipality has the money to resolve the issue.

The $88.6 million in funding permits money to be spent on water and wastewater, Brown said.

The city isn’t technically using the federal funds for the repayments. But because of all the money that arrived and will come in, it has a healthy general fund surplus — that will grow even larger.

“We don’t have to ask the taxpayers to fix those bad habits” from previous administrations that used restricted funds for economic development, Brown said. “Let us use these funds to clear this up and get a clean audit.”

City council will consider legislation Wednesday to transfer the money from the general fund to the three other funds.

“It’s up to council to decide if we do this and when,” Brown said “Here we are in April and the funds are coming in May. It’s in council’s hands. All I can do is recommend we do it. It clears it off the books. I’d like to get a clean audit. We feel this is the best move for the city’s future.”

A 2019 audit, which will include this same issue, is supposed to be released shortly by the state.

But if this is approved by council, a 2020 audit, which recently began, shouldn’t include this, said city Finance Director Kyle Miasek.

“I’m hopeful when they release the 2020 audit, we will not get flagged,” he said “We are not accepting what we did was a misuse of these funds. We’re doing this because we have the opportunity to restore the funds and make them healthier. We hope council will be on board with the administration’s recommendation.”

The city isn’t using the $88,629,500 or even the $5.3 million from the federal government to pay the three funds, Miasek said.

“I’m aware there’s going to be savings as we use the (American Rescue Plan) money that will free up our money,” he said.

The general fund started this year with a $6,907,322 surplus so it can absorb a $4,415,332 payment to the three other funds, particularly because the $88,629,500 is coming to the city in installments next month and May 2022.

“Kyle came to the mayor and said this would be an appropriate time to pay it back,” said Law Director Jeff Limbian. “This gets the monkey off our back. It was a much considered idea. We’re paying ourselves back and the money is there, so now is the time to do it.”

Regarding possible litigation by the state auditor to force the city to pay the three funds, Limbian said, “I think we had a defense, but sometimes it’s better to get it done without having to deal with these issues.”

In addition to funding economic development, the water and wastewater funds also went toward other payments questioned by the auditor.

That included $28,758 to buy an SUV for Brown, $45,379 for software support and maintenance, and $524,629 for an irrigation system at the city-owned Henry Stambaugh Golf Course. After questions were raised by auditors about the SUV and the software, the city used general-fund money to pay for the vehicle and all but $19,176 of the software expenses.

The 2018 audit stated the irrigation system money should have come from the parks and recreation fund, which gets its money from the general fund.

The legislation in front of council has the park and recreation fund transferring $524,629 to the water fund as part of the $2,653,169 reimbursement to it.

The payments would also provide an infusion of money to the water and wastewater funds.

The water fund desperately needs it.

The water fund started this year with a $532,094 surplus and was projected to end with only $119,594.

The wastewater fund started 2021 with a $14,241,550 surplus and is expected to end with a $11,992,495 surplus.

The environmental sanitation budget started the year with a $2,639,656 surplus and was anticipated to finish with a $2,530,156 surplus. But the general fund only owes it $150,000.

dskolnick@vindy.com