By David Skolnick

skolnick@vindy.com

YOUNGSTOWN

After finishing last year with $523,300 less in income-tax and business-profit-tax collections than budgeted, city finance officials are estimating those taxes to drop by almost $2 million this year compared with 2014.

Also, they caution that it could get worse next year and in 2017.

“If we don’t see employee reductions through attrition or significant increases in revenue [this year], 2016 will be a tough year, and 2017 will be a more difficult year,” said city Finance Director David Bozanich.

The city finished 2014 with $42,878,600 in income and profit taxes. The city had projected receiving $43,401,900 last year.

The estimate for this year is $41 million, a 4.4 percent decrease, or $1,878,600 less, from what the city collected in 2014. It’s also about $500,000 more than the city received in 2009 during the national recession.

“We understand that the area is experiencing a potentially significant job loss so we are being cautious,” Bozanich said.

The city will see a decline in tax collections with the closing of the Youngstown mail-processing and distribution center, the relocation of the Cafaro Co. headquarters, and the Northeast Ohio Correction Center private prison losing a contract for federal inmates.

Also, Vallourec Star recently announced it would have a three-week shutdown at its pipe-producing plant. On top of that, the company’s last $2.9 million payment to the city is this year. That amount will drop to $100,000 annually starting in 2016. The money — paid over three years — was for land the company leased from the city for its $1.1 billion expansion in 2013.

There will be no layoffs of city employees this year, but when asked about 2016, Bozanich said, “All options are on the table. We are exploring options to increase revenue and reduce costs.”

The city employs about 760 workers, said Kyle Miasek, deputy finance director.

That means not replacing city employees when they resign or retire, or replacing them with workers at a lower pay rate, Bozanich and Miasek said.

The city loses about 2.5 percent of its workforce annually through attrition, Bozanich said.

“We need to prepare everyone for 2016 being difficult,” Miasek said. “If we right-size and do it slowly but steadily, we’ll be OK for 2016.”

The city is projecting a 5.6 percent decline this year compared with 2014 in taxes collected from those who work and/or live in Youngstown who pay 2.75 percent of their income. The city received $38,004,300 in income taxes last year — 3.3 percent less than in 2013. The estimated amount for 2015 is $35,875,000.

But the city projects a 3.5 percent increase in its business-profit tax. That money is a 2.75 percent tax on profits made by businesses in Youngstown. The city received $4,106,300 in that tax in 2014 — a 8.5 percent decline from 2013 — and expects to get $4,250,000 in 2015.

“It’s hard to predict business-income growth,” Bozanich said.

Also included in the projection is a 0.6 percent increase in “miscellaneous income tax,” which is money collected from those who work in the city, but don’t have their city taxes automatically taken out of their paychecks, and a 1.5 percent reduction in refunds.

City council must approve a 2015 budget no later than March 31 under its charter. A final budget from the finance department is expected in a few weeks.