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Youngstown’s 2015 tax collections were worst since ’09
YOUNGSTOWN
The city ended 2015 with its lowest income-tax and business- profit-tax collections since 2009, and its financial officials expect this year to be even worse.
“The economy has slowed down,” said city Finance Director David Bozanich. “Businesses we thought were growing didn’t. We have to be conservative in 2016. This year’s number will be on the weak side. We will budget a decline in income taxes.”
The city’s total 2015 budget was about $180 million. The city collected $40,869,160 in income-tax revenue last year. Finance officials had expected to receive $41 million.
That $41 million projection, however, was a 4.6 percent decline from the $42,878,600 the city collected in 2014. It also was a far cry from the record $47,332,600 it received in 2006, and it’s the least amount collected since the city took in $40,533,700 in 2009 during the “Great Recession.”
An estimated tax-collection figure for 2016 is expected later this month, Bozanich said.
Deputy Finance Director Kyle Miasek said, “For sure, [tax collections] will be less this year than 2015. It’s going to be a difficult year.”
Miasek also said it’s “very likely” the city will receive less than $40 million in tax collections this year.
If that occurs, it will be the least amount of income and business-profit taxes received by the city since 2003, Miasek said.
In 2003 – the first year that a voter-approved income-tax increase from 2.25 percent to 2.75 percent took effect – the city collected $39,287,000.
The city was impacted last year – and will continue to be impacted this year and at least 2017 – by private-sector job cuts and business closings, Miasek and Bozanich said.
The city receives a 2.75 percent income tax from those who work and/or live in Youngstown, and that same percentage from profits made by businesses in Youngstown.
The downturn in the gas and oil industry is playing a major role in the city’s weakening finances.
Vallourec Star, which opened a $1.1 billion gas-and-oil pipe-producing plant in 2013, cut about 80 jobs in August, and about 100 more a few months later.
Exterran, which makes compressors for the gas and oil industry, announced last month it would stop operations at its Youngstown plant in March. Some of the company’s 70 employees were already let go with the rest of the jobs eliminated when it closes in two months. The facility opened in 2013.
Also, Parker Hannifin shut down its Youngstown business in October for at least 18 months, resulting in 137 job losses.
Parker Hannifin makes hydraulic gear pumps for various industries including gas and oil.
Meanwhile, the Corrections Corp. of America, a private prison, lost a federal contract last year causing it to eliminate 185 employees; and the Cafaro Co. is relocating later this year to Niles. It employs 200.
Also, Vallourec made the last of its three annual $2.9 million payments to the city in 2015 as part of a land deal it reached with Youngstown for its expansion.
That annual figure drops to $100,000 this year.
The money was used largely for capital-improvement projects.
The projects in the planning stage, including the $7.75 million renovation of the City Hall Annex for a new court facility, and major improvements to Phelps Street, won’t be impacted by this budget, Bozanich said.
But few – if any – other major projects without money allocated will be done this year, Bozanich said.
The city’s downtown park/amphitheater proposal will move ahead as there is no general-fund money going toward it, he said.
There won’t be any layoffs of the 750 or so city employees, Bozanich said. There will be minimal hires to replace retiring workers with the new employees paid less than the ones leaving, he added.
The city’s decision to increase its sanitation fee by 30 percent in increments to be fully implemented by July 1 will generate about $2 million to $2.5 million annually for the demolition of vacant dilapidated structures and equipment purchases related to taking down those properties, Bozanich said.
City residents had that increase offset Dec. 1 by a 30 percent decrease in their water bills.
That will increase the number of demolitions annually by about 200 to 250 properties. It will also free up about $500,000 from the general fund and federal money the city receives from the Community Development Block Grant program for other needs, Bozanich said.
The city administration is expected to propose a 2016 budget to city council next month. The budget needs to be adopted by March 31.
But Bozanich said if it’s needed, council can approve legislation to adopt the budget by a later date.