State auditor continues push for outsourcing Niles tax collections

By Jordan Cohen

news@vindy.com

NILES

State Auditor Dave Yost is not backing down from his request for the city to outsource income-tax collections.

In a letter to interim Treasurer Janet Rizer-Jones, Yost has again called for the “fiscal recovery plan to outsource the income-tax collections to RITA [the Regional Income Tax Agency.]”

Last week in an interview with The Vindicator, Yost strongly criticized the Scarnecchia administration for not following recommendations of the state-appointed fiscal supervisors to help the city recover from fiscal emergency, including outsourcing.

He referred to Niles as “the classic example of how it’s not supposed to work.”

The state auditor’s letter dated May 26, a few days before his newspaper interview, followed a surprise inspection earlier in the month in which state auditors discovered $154,000 in uncashed tax-payment checks that had been unopened for more than a month. Robert Swauger, city treasurer at the time, subsequently resigned.

Yost wrote the recommendation is “based on [a] lack of procedures to ensure income-tax collections are processed and deposited timely.”

Rizer-Jones said, however, “mail is being opened daily and deposited timely” and that income-tax collection for the year is more than $437,000 above what was collected at this time last year.

She said Thursday the city may collect nearly $7.1 million for the year, $1 million above the original $6.1 million projection. She attributed the additional money to the increased city income tax and a change in collections from quarterly to monthly.

Outsourcing was a component of the recovery plan put together by former Mayor Ralph Infante, but was removed from the amended plan developed by Mayor Thomas Scarnecchia. Scarnecchia said he wants more answers about RITA before he will consider changing his mind.

“The cost of outsourcing income-tax collection versus retaining it in house must accurately reflect a cost savings,” he said in a letter to council. That includes RITA charges for additional services such as delinquency letters and court cases. Another concern for Scarnecchia is senior citizens who would no longer be able to pay their income taxes at city hall the week of April 15

“Should we turn a deaf ear to those individuals?” he asked. “That is not customer service, nor how our citizens rely on the tax department.”

“I don’t want to see anything outsourced,” Rizer-Jones said.

John Davis, a fiscal commission member, required to review spending during fiscal emergency, also has issues with Yost’s recommendation.

“His letter does not address what is most cost-effective, and that is unreasonable,” said Davis, who has consistently questioned the value of outsourcing income-tax collections.

“This is a dollars-and-cents issue, and the state auditor does not address it,” Davis said.

RITA’s costs are not an issue for Kyle Miasek, however, Youngstown deputy finance director.

Miasek said RITA charges its Ohio cities 3 percent each year up front, but then pays rebates in June of the following year. As an example, Miasek said RITA charged the city $1,275,000 in 2014, but rebated nearly 59 percent of that figure – $752,000 – the following June.

“We can’t do the kind of work their software system can do,” Miasek said. “It’s amazing and it makes sense.

Youngstown has been using RITA for its income-tax collections since 2006.