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Revenue cuts could endanger county services
Mahoning officials await vital information on holiday sales tax collections and other funding sources.
YOUNGSTOWN — Mahoning County government is on a short timetable to shrink its spending in the face of significant revenue reductions.
County officials must soon determine what spending cuts should be made in the main operating fund — the general fund — and how deep they should be. Dependent on this fund are the sheriff’s department, prosecutor, courts, 911 center, elections board and many more.
Looming reductions follow hiring of 112 additional full-time workers since the end of 2007, almost all of them outside the general fund; and pay raises of 11 to 32 percent also given that year to some key employees.
Debate is also beginning on whether the second of the county’s two sales taxes, which go to the general fund, should be made permanent.
“You measure twice and you cut once,” county Commissioner David N. Ludt said. “We need to get all the information before we make the cuts.”
Time is running out: State law requires adoption of a permanent full-year budget by April 1.
Decline foretold
“We’re going to be monitoring every day sales tax fluctuations, interest income and real estate transfer fee collections, but panicking is not going to do anyone justice,” said county Auditor Michael V. Sciortino.
The auditor’s office has projected a 12 percent decline in total general fund revenues from $67 million in 2008 to $59 million in 2009, according to a memorandum from county Administrator George J. Tablack to Sheriff Randall A. Wellington, who heads the general fund’s largest department.
The commissioners’ office is formulating cost-cutting plans in case major cuts become necessary, Ludt said, adding that layoffs of county employees would mean reduced services from county government.
Employee union contracts typically require at least 30 days’ notice of layoffs. To date, no money has been appropriated for unemployment compensation, according to the auditor’s office.
“A county is like a big ship ... You can’t just make a turn on a dime,” said Carol L. McFall, chief deputy auditor.
Why now?
In the general fund, significant losses are occurring in all four major revenue streams: sales tax, state funds, real estate taxes and interest income, said McFall.
From its two half-percent sales taxes combined, the county received $28,259,168 in 2008.
In January, the county received $2,185,738 in sales tax, which represented a 2.35 percent decline from what it received in January 2008.
A two- to three-month lag occurs between collection of the sales tax at the cash registers and the county’s receipt of that money from the state. Mahoning County officials still await the February and March sales tax receipts, which will reflect sales made late last year.
“It’s the March payment that is our highest payment in the county. That is the one that truly reflects Christmas” sales, McFall said. About 10 percent of the entire year’s sales tax collections is typically received by the county in March, she noted.
The county has good reason for concern. According to the International Council of Shopping Centers-Goldman Sachs nationwide tally, December retail sales fell 1.7 percent. In fact, for all of 2009, the auditor’s office is projecting Mahoning County sales tax receipts will be $27,425,988, which is 3 percent below the 2008 total.
That office is also projecting a 3 percent loss in state money going into the general fund in 2009.
Real estate tax collections are also suffering because of delinquent real estate taxes, McFall said.
“Interest is going to be down because your interest rates have tanked, and the amount of cash that the county’s going to carry is going to be down because we’re going to be short money everywhere,” McFall said.
The first storm
One of the first places the storm clouds have gathered is the Department of Job and Family Services. The combined state and federal allocation to JFS has been cut from $26.1 million in 2007 to $21.1 million this year.
In the wake of that $5 million loss, JFS management and employee labor union officers are discussing concessions. Last week, the commissioners took the first step and authorized a reorganization and job abolitions at JFS.
Commissioner John A. McNally IV said layoffs appear inevitable, projecting as many as 14 of JFS’ 300 employees will lose their jobs.
If additional funding cuts occur, the number of layoffs in that department could be substantial, Ludt said.
Faced with a series of state funding cuts, JFS imposed a hiring freeze in January 2008, and at least 20 positions are now vacant.
JFS will terminate its contracts with various agencies at the end of this month to save about $850,000.
Among the contracts to be cut is one with Youngstown schools for a truancy intervention program and others that fund Community Legal Services, which provides legal assistance to low-income people; Hope House, which provides supervised child visitation in domestic relations cases; Burdman Group, which serves mentally disabled people and operates a domestic violence shelter; Goodwill, which serves disabled people; and Beatitude House, which provides job training services.
The expectation of further cuts in next year’s state funding casts doubt on whether funding for these agencies can resume after the new state fiscal year begins July 1, McNally said.
“There are so many factors involved. The sales tax — what are we going to bring in? Is Gov. Strickland going to cut another $8 million from Job and Family Services? We don’t know. Tell me how many cars are going to sell. We don’t know,” Ludt said.
Another uncertainty is whether the federal economic stimulus package will bring money into Mahoning County, he said.
The jail issue
Because of uncertainty over the number of revenue-producing federal prisoners in the jail, the commissioners adopted only a temporary first-quarter general fund budget of $16,117,448 this year, instead of a permanent full-year budget.
“When we put out the temporary budget, we told people: ‘This is temporary, and, if things don’t look good, don’t expect the same amount of money that you got last year,’” McNally said.
Revenue-generating prisoners, paid for either by the federal government or Youngstown, are required for full jail operations. To avoid jail costs, the city is diverting some of its prisoners to electronically monitored house arrest, city officials said.
In a Jan. 13 memorandum to Sheriff Wellington, Tablack, who also is budget director, emphasized “the budgetary importance of maintaining an average daily balance of 150 federal inmates.”
If 150 revenue-generating inmates can’t be maintained, the sheriff’s department should be laying off staff to conserve its budget, Ludt said.
Tablack added: “Without this revenue from the original plan, which allowed an additional 75 employees to be hired or promoted within the sheriff’s office, the budget cannot sustain these increased costs.”
“It’s premature to discuss any possible layoffs. There may be concessions,” Wellington said, noting that contract negotiations are under way with the Fraternal Order of Police.
The county jail averaged 122 revenue-generating inmates in December and January, almost all of them federal prisoners, Wellington said.
The jail remains under federal court supervision in the wake of a 2003 lawsuit won by inmates who said unconstitutionally crowded conditions prevailed in the jail. Settlement of that lawsuit requires that the jail be fully open and staffed.
Federal prisoners have recently been generating $4 million to $5 million annually for the jail.
County officials are concerned about the prospect of a direct federal contract with Corrections Corp. of America being reached early this year to house federal inmates at CCA’s private prison on Hubbard Road. Those officials fear such a contract could significantly reduce the number of federal inmates in the county jail.
Raises and hiring
The commissioners and department heads that depend on the general fund have weathered the storm of the county’s on-again, off-again sales taxes in recent years.
Ludt and McNally acknowledged that the current economic crisis is broader, however, because it adversely affects the revenue streams of nearly every department and board of county government.
“The negative financial picture across the country starts at the federal level, has worked its way down to the state level, and now is finally working its way down to local government,” McNally said. “Job cuts and reorganizations and things that the private sector is doing are the same things that we’re going to have to face.”
The voters made one of the sales taxes continuous in May 2007. The other one is a five-year measure, expiring Oct. 1, 2010.
After the first sales tax became continuous, commissioners gave “equity adjustment” pay increases ranging from 11 to 32 percent, retroactive to Jan. 1, 2007, to 12 key employees that a consulting firm said were underpaid compared to those in comparable jobs elsewhere.
The 2007 payroll further showed 91 employees with increases of 20 percent or more, 101 employees between 10 percent and 20 percent and 105 between 6 percent and 10 percent. Some reasons for the increases were promotions, increased work hours and the consulting firm’s recommendations.
There was also a surge in full-time county employees from 1,669 as of Dec. 31, 2007, to 1,781 a year later. Of those, 760 employees were paid in part or in full from the general fund as of Dec. 31, 2007. That number rose to 761 a year later, for a gain of just one full-time employee.
In 2007, the county’s total payroll expense was $73,555,605, of which $27,227,835 occurred in the general fund.
In 2008, the total payroll expense was $77,417,834, of which $29,958,959 was in the general fund.
McNally, when asked about the increase in county employees, noted that the county government is decentralized — with elected department heads and judges controlling hiring in their own departments.
Sales tax renewal
Ludt said commissioners expect to put the expiring sales tax on the ballot for renewal this November, but they haven’t discussed whether it should be continuous or for five years. Ludt said he wants the tax to be made continuous to help the county maintain a desirable bond rating.
McNally said the measure could go on the ballot this November or in May 2010, and he has no preference as to whether it should be a five-year or continuous tax.
“I think we’ll be successful either way,” he said.
milliken@vindy.com