Light is getting brighter at end of Girard's tunnel
Last month, Girard Mayor James Melfi told members of the state fiscal emergency commission that his administration had developed a plan to erase the huge amount of red ink in the operating budget by the year 2011. However, the commission, which is overseeing Girard's recovery, put off endorsing the plan until after the Nov. 8 general election. That's because voters are being asked to approve a 0.25 percent income tax increase for police services.
The tax increase is an integral part of the mayor's deficit reduction proposal because of the $375,000 it would generate annually.
But while commission members have taken a wait-and-see attitude, they must be encouraged by this week's report from Melfi that the deficit, which stood at $1.15 million at the end of 2004, has been trimmed to $890,000. That's a decrease of $260,000. If this downward trend continues, city government will hit the $300,000 reduction mark the mayor set for year's end.
Setting such goals and then achieving them are important to Girard's recovery effort because they demonstrate the fiscal discipline needed to plug the holes in the public treasury. If the trend continues, Girard could be out of fiscal emergency sooner than 2011. The sooner the better.
Brightening picture
Melfi says that spending cuts and revenue increases are responsible for the brightening picture, but it's the revenue side of the equation that has us intrigued.
That's because of a decision made by the mayor and council to turn over income tax collections to the Regional Income Tax Agency (RITA), which provides such assistance to 115 municipalities. RITA charges 2.75 percent of the city's tax collection for its services.
Apart from the $60,000 in savings in wages and benefits through the elimination of the city income tax department, Girard is benefiting from RITA's expertise and aggressiveness in going after individuals who should be paying income tax but don't.
The mayor noted that the agency increased the city's income tax collections by $250,000 in the first eight months of its being retained by Girard.
"RITA, we felt, was one of those areas where we could reduce operational cost and improve collections," Melfi said this week. "It has truly proven to be a great benefit to this community in a short time."
That should reassure Youngstown Mayor George M. McKelvey, who recently persuaded City Council to hire RITA to take over income tax collections. Tax delinquencies have been a long-standing problem for Youngstown government and McKelvey deserves credit for taking an aggressive approach in dealing with it. The administration anticipates an additional $300,000 in new revenue flowing into the general fund in the first year.
That's not an insignificant return on the city's investment. The agreement calls for RITA to be paid a fee of 2.5 percent of the total income tax it collects.
Governments at all levels have no choice but to do more with less given the state of the economy and the refusal by taxpayers to dig deeper into their pockets.