Girard seems well prepared to handle economic turmoil

No discussion of how communities in the Mahoning Valley plan to ride out the current national economic storm would be complete without focusing on the city of Girard.

That’s because Girard has been battling budget crises for more than eight years. In 2001, the state declared the small city to be in fiscal emergency and since then Mayor James Melfi and city council have had to get spending decisions approved by a fiscal oversight commission.

While at first blush that may appear to be unwieldy with regard to governance, the fact of the matter is that fiscal emergency has brought about budgetary discipline.

Such discipline will be required of every local government this year as new President Barack Obama tries to pull the national economy out of its tailspin.

In Girard, $2.5 million in red ink has been erased, leading to a $200,000 surplus in the 2008 budget. However, it is instructive that the year-end balance in 2007 was $400,000. No, the city didn’t go on a spending spree, but had to deal with a loss in revenue last year brought on by an array of factors beyond the city’s control.

That’s the reality today. With private sector jobs being shed at levels not seen since the Depression, and with health care and other operating costs rising, governments are now being forced to do what the city of Girard has been doing since 2001.

Because 80 percent of the operating budget is gobbled up by employee salaries and benefits, controlling those are the first order of business.

Wage freezes

Over the years, Girard employees have accepted wage freezes, jobs have been eliminated through attrition and vacancies have been left unfilled.

And even with all of that, the city’s mayor and council know that other tough decisions must be made. That’s because one of Girard’s largest employers, Indalex, which operated an aluminum extrusion plant, closed last year. The result: a loss of $225,000 in tax revenue and $250,000 in water and sewer payments.

This year, the revenue shortfall will be even greater — about $75,000 more,

“We really have to look at cost in the first part of 2009 and going forward,” Melfi says. “It’s going to be impossible to make up that loss, but fiscal emergency has prepared us to be able to get through the loss of our largest employer.”

How he and council have managed the budget and the demands made on the them by the state fiscal oversight commission offer lessons to other communities that are bracing for tough times this year.

There is one hopeful sign for Girard, namely the announcement by V&M Star Steel of an expansion of project with a $1 billion price tag. V&M has a plant in Brier Hill in Youngstown. Mayors Jay Williams and Melfi have reached agreement on a joint economic development zone that would result in both cities sharing tax revenue if V&M chooses to build its new facility and office building adjacent to its current plant.

The land that would be required spans both Youngstown and Girard.

The state of Ohio, led by Gov. Ted Strickland and Lt. Gov. Lee Fisher, who also is development director, is going all out to persuade the company to build in the Valley.

Likewise, Williams and Melfi have made it clear that there will be no impediments to making the project a reality.

But, the ultimate decision is out of their control, which is why the cities have to deal with today’s economic realities.