Don’t mess with RITA in Niles recovery plan

It’s been nearly three long years now since Ohio Auditor Dave Yost declared the city of Niles in the demeaning and unflattering state of fiscal emergency. In the interim, city officials have slogged through plan after plan after plan in attempts to move the city out of state oversight and in the direction of long-term financial solvency.

Now at long last and with patience running thin among state watchdogs over the municipality’s purse strings, a potentially viable conduit out of fiscal emergency appears to have taken solid shape.

Last week, the Niles Financial Planning and Supervision Commission, the state-appointed panel overseeing the city’s recovery, put its stamp of approval on the seventh rendition of a plan authored by Mayor Thomas Scarnecchia and approved by city council. It lays out a road map for cost-cutting and capital improvements for the beleaguered city of 19,000 people over the next five years.

Among its more noteworthy features include implementation of two $5 license-plate fees to generate about $180,000 a year, borrowing of $1.6 million to make critically needed improvements to crumbling city buildings and dismantling the city’s income-tax department.

That latter move to outsource most income-tax functions of city government to the Regional Income Tax Agency operated in connection with the Council of Regional Governments has ignited a firestorm of opposition from some within city government, most notably the leadership of the American Federation of State, County and Municipal Employees Local 506 in the city.

RITA, formed in 1971, administers the income-tax ordinance of any Ohio city or village that joins it through the Regional Council of Government. Today, more than 250 communities or about 40 percent of municipalities in the state use RITA to handle their income tax collection and enforcement efforts. For a fee estimated at between 1.89 and 2.48 percent of collections, RITA offers comprehensive tax services from registration through litigation of challenged tax bills.

As a critical pillar of the proposal, RITA must not be messed with. Attempts to fight the outsourcing could threaten the viability of the recovery plan and by extension the city’s long-term financial stability.

We therefore would ask the city’s major labor union to think long and hard about the potential adverse ramifications of filing a grievance and seeking third-party arbitration of the dispute.

Opposition to the totality of the recovery plan would only muck up the already murky financial waters the city must get through en route to recovery.

NO LAYOFFS OR JOB LOSSES

First, as Mayor Thomas Scarnecchia has explained time and time again, no one will lose his or her job in city government over the transfer. Employees in the city income-tax office will be allowed to use their seniority to bump into other union jobs. In addition, Lisa Smathers, the director of the income tax department, plans to retire soon.

Second, the savings from using RITA could be substantial. The city could save $42,000 a year by shutting down its income-tax office and take in up to an additional $400,000 in revenue, according to documents provided by the city. Though some criticize those estimates as inflated, particularly for a city still reeling from the aftereffects of the Great Recession, we’re confident RITA ultimately would do more good than harm to the city’s bottom line.

After all, RITA is no slouch, and others recognize as much. For more than 30 years, the Government Finance Officers Association of the United States and Canada has awarded RITA a Certificate of Achievement for Excellence in Financial Reporting. It’s also received numerous Auditor of State Awards for its clean record keeping and audits.

Other cities that have struggled with financial distress, such as Girard and Youngstown, have successfully turned to RITA for assistance. Niles should not hesitate to join in.

Too much is at stake to cling to the status quo. The stigma the city has endured over its fiscal collapse will not be lifted without continued decisive and constructive action. What’s more, the city faces strict penalties without a firm plan in place, namely a 15 percent across-the-board slashing of revenue.

Clearly, many players implementing many changes are needed to nurse Niles back to sound fiscal health. RITA is but one player, but it is a critical piece of the financial-recovery puzzle. As such, it must be preserved.