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State auditor’s office is ‘disappointed’ Youngstown rejected repayment proposal
YOUNGSTOWN
In response to Mayor Jamael Tito Brown’s statements that the city won’t repay about $3.1 million over 15 years from its general fund to three other funds, a state auditor spokeswoman said the office is “disappointed that the city has rejected our proposal.”
Allison Dumski, an auditor spokeswoman, said Friday, “Because the auditor understands the city of Youngstown’s challenging financial position, we have attempted to work through extraordinary efforts to reach a resolution on the repayment of the sewer and water funds.”
She added: “The auditor of state’s focus is always on what’s best for the taxpayer. We remain dedicated to finding solutions for local governments, which will benefit taxpayers and the financial health of the entity.”
It was an unusual step for the auditor’s office to comment on the issue as its policy is to not discuss such cases until an audit is concluded.
The audit of the city’s 2017 finances has been occurring for well over a year. It’s expected to be finished in a few weeks.
But the office was prompted to make the comments Friday, a day after Brown said the city “rejects” what he called Auditor Keith Faber’s “demand” that Youngstown repay about $3.1 million used for economic-development projects from its general fund to the water, wastewater and sanitation funds.
The city has been negotiating with the auditor’s office and “outlined the various economic difficulties facing the city and raised sound legal objections to the auditor’s position,” Brown said Thursday.
The city, the mayor said, proposed a long-term payment plan and commitment to discontinue the loan/grant program. He didn’t say how many years the city wanted the repayment to be made.
He added: “Despite the city’s best efforts, the auditor would not budge from forcing the city into an unaffordable repayment option that would jeopardize city services and employees. The city cannot and will not agree to place such a burden on its citizens.”
The city’s decision could result in a legal battle with the state auditor’s office. Also, the auditor could put the city in fiscal emergency if it refuses to pay the money from the general fund.
The auditor’s office first contacted Brown in a May 4, 2018, letter informing him that using $4,462,662 in 2017 from the water, wastewater and sanitation funds for economic development “may violate” state law and the Ohio Constitution.
The $4,462,662 was lowered to about $3.1 million likely because of a loan repayment scheduled for December by the owners of the downtown DoubleTree by Hilton hotel.
The no-interest loan for $2,050,000 is to have $750,000 of it forgiven as long as it’s paid back by December.
Also, the auditor’s office has asked about the nearly $1 million spent in 2018 from the water, wastewater and sanitation funds for economic-development projects.
The city has used close to $10 million from the three funds since 2010 for economic development, but the auditor’s office has only reviewed the practice since 2017.