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Youngstown tax revenue rose in 2016, expected to grow again this year
EXCLUSIVE
YOUNGSTOWN
The city ended 2016 with about $1.3 million more in income-tax and business-profit-tax revenue than anticipated at the beginning of that year, and city financial officials expect an even larger amount this year.
While tax revenues increased for the first time since 2013, the $41,587,900 collected in 2016 is close to what Youngstown collected in 2010 at the end of the Great Recession.
The city is moving in the right direction in terms of revenue, however, and is anticipating a 1.2 percent increase for this year compared to 2016, said Finance Director David Bozanich.
“It’s a conservative increase,” said Mayor John A. McNally. “If it’s more than that, that’s fantastic. We’re glad we’ve got the stability to increase our projection.”
The 2016 amount is better than the $40,869,160 collected in 2015, but still less than 2014’s figure of $42,878,600.
The city expects collections this year to be $42,010,000, he said. That’s $422,100 more than 2016’s income and business-profit revenue.
While 2016’s collection is an improvement, the amount is still less than any other year since 2010 – except for 2015.
In January 2016, the city projected income-tax and business-profit-tax revenue for last year at $40.3 million. That would have been the least amount of tax revenue since 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 in 2003.
Instead, the city collected $41,587,900 last year.
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 improvement came from $457,300 more collected than anticipated from business profits, Bozanich said.
“It reflects the national economy of low unemployment and steady job growth,” he said. “We’re seeing more stability from our larger employers and expect that to continue this year.”
Also, the city collected $893,800 more from income taxes – with $454,800 of that latter figure being improved collections from professionals such as doctors and lawyers who do a small amount of business in the city and have either paid no or little taxes to the city in the past, Bozanich said.
“We didn’t do as good a job at tracking them down before,” he said. “But RITA [the Regional Income Tax Agency, which handles the city’s tax collections], is able to look at federal income taxes for doctors and lawyers who come into the community. It’s tough to catch. In a lot of cases, they didn’t know they’re supposed to pay income taxes to us. Now they do and we expect that number to continue to grow.”
The city also refunded $31,500 more in taxes than anticipated and paid $31,700 more to RITA than expected to come up with a $1,287,900 increase last year over its projection.
There will be no layoffs this year to the city’s workforce of about 750 employees, McNally said.
The city plans to hire six police officers in the next four to six weeks, he said.
While city officials aren’t prepared to put a projection on 2018 at this point, Bozanich said, “I think we’ll see significant growth. We’ll see a turnaround in the oil and gas industry” which will have a “very positive impact on local manufacturers with Vallourec Star among the leaders on that.”
Vallourec spent $1.1 billion on an expansion plant it opened in October 2012. The company makes steel tubes for the oil and gas industry, but has experienced a financial downturn in the past couple of years because of worldwide slowdown in that business.
Also, a $20 million chill-can development and distribution center on the East Side will be fully operational in 2018 employing about 250 workers.
The city finance department is working on the 2017 budget and will have it proposed to city council in a few weeks, Bozanich said. The budget must be adopted by council by March 31.