43
Yost vs. Scarnecchia: Round 2 on outsourcing
By Jordan Cohen
NILES
The communications director for Ohio Auditor Dave Yost blamed the opposition to outsourced income-tax collections by Mayor Thomas Scarnecchia on “political reasons” that overlook the 2014 performance audit showing annual savings of $138,000 with an outside agency.
“We suspect the savings may be even greater,” said Benjamin Marrison, who described the $138,000 as “a conservative calculation.”
The savings include the state auditor’s suggestion that one full-time employee be retained for customer service.
“Financially, the data makes clear such a move would be good for the city’s taxpayers,” Marrison said.
The communications director was reacting to Friday’s Vindicator story, in which Scarnecchia, in a letter to city council, said he was looking for proof of cost savings before going with Regional Income Tax Agency and eliminating the tax department.
The mayor had removed the outsourcing provision from the city’s financial recovery plan that had been put in by his predecessor, Ralph Infante.
Yost, who last week strongly criticized the mayor’s objections to outsourcing, sent a letter to Interim Treasurer Janet Rizer-Jones encouraging contracting with RITA.
Marrison suggested the mayor pay closer attention to the figures in the 2014 audit, which show the average cost for outside agency tax collection is 2 cents per dollar collected compared with the city’s higher cost of 5 cents per dollar.
“While the savings may seem insignificant, those pennies add up to far more than $100,000 and some peer communities are paying less than 2 cents on the dollar,” Marrison said in a written statement.
According to Amy Arrighi, RITA chief legal counsel, the agency charges 3 percent from its members’ tax collections each year.
Arrighi said if RITA’s calculations show that a municipality’s cost is actually “less than the 3 percent retained, the difference is refunded to the member.”
Youngstown and Girard, which have used RITA for more than a decade, have reported receiving sizable annual rebates.
The figures cited in the 2014 audit were based on annual tax revenues of $5.7 million, however Rizer-Jones said latest projections indicate Niles may collect more than $7 million this year because of the half-percent increase in the city income tax and a change in business collection methods from quarterly to monthly.
That should not make a difference in the state’s calculations, Marrison said.
“Based on a cursory look at peer communities and the 2014 cost in Niles, a $1 million increase does not move the needle to make keeping it in-house economical,” Marrison said.
The mayor had minimal comment when informed of Marrison’s statements. “I am exploring all possibilities,” was all he would say Friday.
In his letter to council, Scarnecchia expressed concerns about many senior citizens who usually make their income-tax payments at city hall and worried about turning a “deaf ear” to their needs.
Marrison was not sympathetic, however.
“The good people of Niles are as capable of getting their taxes filed properly as the many other communities – including Youngstown – that have outsourced their income-tax collections,” Marrison said.