2019: A year of reckoning for the city of Youngstown

In early 2018, we opined that Youngstown’s new mayor, Jamael Tito Brown, would have no choice but to slash city government’s payroll because the operating budget was imploding.

Brown, however, chose to cling to a campaign slogan that had resonated with city employees, “I don’t want to send anybody home.”

The former city councilman and ex-chief deputy in the Mahoning County Treasurer’s Office stood firm on that position even after a certified public accountant hired by him to examine Youngstown’s finances projected a $16 million budget deficit in five years.

Michael Abouserhal, retired vice president of finance and business services at Cuyahoga Community College and one-time assistant director of finance and controller for the city of Cleveland, issued this ominous warning to the mayor:

“If decisions are not made, the city could end up in fiscal emergency. You need to focus on the deficit as soon as possible.”

Brown obviously didn’t share Abouserhal’s sense of urgency because he ignored many of the recommendations for reducing the deficit.

Thus today, as the new year unfolds, city government is facing the very real possibility of state-declared fiscal emergency.

The general fund is just about bare, and based on departmental budget requests for 2019, it will be in the hole for $2.2 million.

Interim Finance Director Kyle Miasek is in the midst of matching the spending requests to the projected revenue to erase the red ink.

Unfortunately, there’s an unanticipated $5.5 million obligation the state auditor’s office has determined must be paid out of the general fund.

The $5.5 million was withdrawn from the water, wastewater and sanitation funds by previous administrations to defray the cost of downtown-development projects. The state has ruled that the money was misappropriated and, therefore, must be repaid.

State Auditor Dave Yost, who will soon be sworn in as Ohio attorney general, is aware that requiring the city to repay the entire amount at once will blow up the general fund and trigger a state-declared fiscal emergency.

Installment plan

Yost, therefore, is willing to stretch repayment over 10 years. But even with such an installment plan, the city’s general fund budget will confront a shortfall.

Youngstown’s financial woes are the result of shrinking tax revenues, population loss, an increase in the number of city residents on fixed incomes and thus not paying income tax and the administration’s refusal to substantially slash the payroll.

As we have noted on many occasions, employee wages and benefits gobble up more than 70 percent of government’s operating funds.

That’s why financial consultant Abouserhal’s most drastic recommendations called for employee layoffs and furloughs, elimination of raises and an increase in employee health-insurance premium contributions.

It is noteworthy that the office of state Auditor Yost recommended Abouserhal to Mayor Brown.

Concessions by the unions must be on the agenda this year if wholesale layoffs are to be avoided. Pay increases of 1 percent this year and 1.5 percent in 2020 are no longer sustainable, while the 10 percent employee contribution to health-insurance premiums must be increased to 20 percent, as recommended by Abouserhal.

He has also proposed eliminating the pension pick-up for new employees and reducing it for existing workers.

The mayor must also consider the sale or closure of the city-owned Henry Stambaugh Golf Course and the elimination of 20 jobs in the fire department and 30 jobs in the clerk of courts/municipal court as he deals with the fiscal crisis.

It is important to repeat the warning from Abouserhal last year when he made public his budgetary analysis :

“If decisions are not made, the city could end up in fiscal emergency. You need to focus on the deficit as soon as possible.”

Today’s budget implosion is the result of the mayor ignoring two key deadlines last year: June 30 for the administration and the unions to decide on concessions; Aug. 30, for the mayor to implement layoffs within departments financed by the General Fund.

It’s obvious city officials have failed to recognize that putting off the inevitable is no longer an option.

The $5.5 million finding by the state is a stark reminder that storm clouds are gathering over Youngstown.

There’s no pot of gold at the end of the rainbow.