Youngstown can’t ignore projected budget shortfall

Five months ago, an out-of- towner who reviewed the city of Youngstown’s books offered this brutal appraisal:

“[Youngstown’s] finances are sobering. The city, according to evidence, has serious structural economic difficulties impacting both the expenditure and revenue sides of the ledger, causing expenditures to exceed revenue.”

Robert G. Stein, a state conciliator who was brought in to resolve the labor contract dispute between the city and the police patrol officers, went on to say that reversing the downward economic trend would take some time. However, Stein did offer this very poignant note of caution:

“ … But in the interim, prudent is the watchword.”

Against the backdrop of the conciliator’s appraisal of Youngstown government’s finances came this warning last week from veteran Finance Director David Bozanich: The city could face a budget shortfall of $2.5 million in 2018.

But, like Stein, Bozanich didn’t stop with that reality check. He noted that while the city’s operating budget for this year is balanced, that could change if revenue from income taxes and business profit taxes fail to reach their projections.

So, with an independent appraisal of the finances and an in-house warning of fiscal gloom, what should the administration of Mayor John A. McNally do?

The answer is one we have long advised local governments and other tax-supported entities to embrace: Cut spending.

As we’ve argued ad nauseam, the decline in the region’s population, the erosion of the tax base and the exodus of young, college-educated Mahoning Valley residents demand caution on the part of the keepers of the public purses.

In Youngstown, the shrinking population has exacerbated the deterioration of the neighborhoods and has increased the number of residents who do not pay income taxes.

While Bozanich is meeting his responsibilities as the city’s chief financial officer by delivering a warning about the 2018 budget, he must know that private-sector taxpayers have little sympathy for their public-sector counterparts. After all, the Great Recession of 2008 caused havoc in the workplace. The unemployment rate skyrocketed, while workers lucky enough to keep their jobs were forced to grant concessions. Pay raises became a distant memory, while pension plans, if they were offered, were frozen. Companies that provided health-care insurance required workers to pay higher premiums and deductibles.

In other words, the national recession played havoc with the private sector.

A NECESSARY ALARM

Thus, when Bozanich told a meeting of city council Monday that he didn’t want to sound the alarm about the tight budget for 2017 and his concern about 2018, our reaction was, it’s about time the alarm was sounded in the public sector.

The future is uncertain at best, given what’s taking place in Columbus and Washington. The budgets that the state Legislature and Congress are contemplating aren’t going to result in a financial windfall for local governments.

“We may lay off in 2018,” the finance director told members of council. “We are comfortable we can make it through 2017.”

But before there’s a lot of hand-wringing over layoffs, consider this fact that Bozanich revealed last week:

There are 30 to 40 more employees on the payroll than Youngstown city government can afford.

The obvious reaction to that revelation can be summed up in a one-word question: Why?

The case for budgetary belt-tightening was made last year when state conciliator Stein of Kent formulated a binding three-year contract between the city and the patrol officers that contained a 1 percent pay raise and a $150 lump-sum payment. Such a lean contract is a rarity in government.

The obvious solution in Youngstown is staring Mayor McNally in the face: Get rid of 30 to 40 employees that the city cannot afford to support.

If we’ve said it once, we’ve said it countless times: The major expense in government is employees’ wages and benefits.

While it would stand to reason that the payroll would be the first to be targeted in challenging economic times, the reality is that job security is taken for granted in the public sector.

It shouldn’t be – especially in a city like Youngstown that must prepare for a possible flood of red ink in its 2018 budget.