McNally having the last laugh

“If we were to sum up the findings of the independent review of Youngstown city government conducted by The PFM Group, it would be this: There’s no pot of gold at the end of the rainbow – and, in fact, there isn’t much of a rainbow.”

So said a Vindicator editorial in September 2012 after then-Mayor Charles Sammarone made public the findings and 50 recommendations contained in the study by PFM.

Sammarone sought the top-to-bottom review of city government because of the fiscal storm clouds that were gathering.

At the time, he warned of a loss of income tax revenue as a result of the construction phase of the V&M Star projects coming to an end and the expected closing of the distribution center at the U.S. Post Office downtown.

David Eichenthal, director of management and budget consulting with PFM, agreed with Sammarone’s bleak assessment of Youngstown’s financial health.

Eichenthal warned city council that the operating budget would implode if government didn’t change the way it operated. Red ink would ooze from the city’s ledgers.

Lawmakers refused to adopt all 50 recommendations in the independent study, especially the ones having to do with the payroll.

Thus, the last five years have been a challenge for managing the budget.

Remember The Vindicator’s observation in 2012 that there was no pot of gold at the end of the rainbow?

Budget projections

Well, today, based on the latest projections of the General Fund, it’s fair to say the city doesn’t even have a pot to you-know-what in. Things are that bad financially.

Indeed, Mayor John A. McNally may well be thanking his lucky stars that his re-election bid came to a screeching halt in May when he failed to win the Democratic nomination.

McNally, who has a criminal record stemming from his conviction in the Oakhill Renaissance Place criminal enterprise, will be leaving office at the end of the year.

Former city Councilman Jamael Tito Brown defeated the mayor for the Democratic nomination. Brown will face three independent candidates in the Nov. 7 general election: Sean Mc-Kinney, Janet Tarpley and Cecil Monroe.

But it’s McNally who’s having the last laugh because his successor will confront this reality: A projected deficit of $2.5 million to $3 million in the General Fund.

But that isn’t all. Because most of the operating revenue is dedicated to payroll – wages and benefits – a reduction in the number of employees cannot be avoided. How many positions need to be eliminated?

Here’s the assessment from Finance Director David Bozanich, who has been in city government for more than three decades:

“We’ll look at attrition first and, if need be, have a buyout program and possible layoffs as a third possibility. I don’t want to be an alarmist and say, ’40 people are being laid off.’ But for 2018, we have a $2.5 million to $3 million deficit.”

The magic number is 40.

Anything short of the new mayor handing out pink slips will only be putting off the inevitable.

While Finance Director Bozanich’s comments suggest he’s working on a deficit reduction plan, there’s a huge cloud hanging over his head that may derail his efforts.

An ongoing state investigation into downtown development projects undertaken by developer Dominic Marchionda has Bozanich in the crosshairs.

Marchionda, viewed by many as the savior of downtown Youngstown, has pleaded not guilty to the 100-plus counts contained the 73-page indictment unsealed earlier this month by the Mahoning County grand jury.

Cleveland Atty. John McCaffrey is representing the developer. McCaffrey has had other clients in the Mahoning Valley, including Youngstown businessman Anthony M. Cafaro Sr.

According to the indictment, Marchionda and his affiliated businesses are accused of scheming “to funnel government money” to himself through his various companies “to live his lavish lifestyle and enrich himself.”

The indictment also alleges that an unnamed city official helped the developer with the scheme in return for a $25,000 bribe.

A source with knowledge of the lengthy investigation into Marchionda told The Vindicator that the city official is Bozanich.

The newspaper has found enough hints in the indictment that point to the finance director, including a line that states the $25,000 is needed to “take care of Dave” to ensure a Marchionda project obtains city approval.

It’s jut a matter of time before Bozanich is indicted, which means the city’s financial troubles will take a back seat to his legal problems.

Members of a special public corruption investigative unit in Ohio Auditor Dave Yost’s office are leading the probe of the downtown projects. Lawyers from Ohio Attorney General Mike DeWine’s office are prosecuting the case.

With just about two months before Mayor McNally leaves office, the new administration will have to deal with city government’s financial implosion.

It’s a safe bet that Bozanich’s days are numbered. He serves at the pleasure of the mayor. Under the charter, the mayor appoints the finance director with the approval of council.

McNally’s successor will want to start with a clean slate, which means appointing a chief financial officer who is doesn’t have a cloud of suspicion hanging over his head.

On the other hand, city government needs an individual who not only is experienced in government financing, but has a track record of balancing budgets.

And most importantly, the new finance director must be confident enough politically to insist on layoffs if retirements and buyouts don’t get to the magic number of 40.

To understand why McNally may not regret losing his re-election bid, consider these eye-popping facts about Youngstown contained in the latest population estimate by the U.S. Census Bureau:

The population of 64,312 (it will be significantly lower after the next national census in 2020) is almost evenly split between whites and blacks. That means the racial divide that was evident in the primary election – McNally is white and Tito Brown is black – will get wider if the next mayor doesn’t make a concerted effort to tear down the barriers.

About 60 percent of the housing units are owner-occupied, with the median value of $44,600.

Median household income (in 2015 dollars) is $24,133; the per capita income in a 12-month period during the census bureau update is $15,056.

Percent of Youngstown residents in poverty is a whopping 38.3 percent.

So when the new mayor comes in on Jan. 1, he may well hear Dandy Don Meredith singing “Turn out the lights, the party’s over.” Who is Meredith. Google him.