YOUNGSTOWN – The city’s financial troubles due to the COVID-19 pandemic are far from over. The most recent income tax collection has been better than just two months for at least the past two years.
“There are big concerns,” said Kyle Miasek, interim finance director. “The problem this year could be worse than in 2020.”
The city’s income tax levy for November was $ 3,325,767. Payments for that month were made this month as businesses have about 30 days to transfer taxes to the city from the end of November.
The only months that were worse for collections in the past two years were April 2020 at $ 3,145,500 – when the pandemic initially forced numerous companies to block or restrict customer access by the state – and 3,285,000 USD in August 2020.
Youngstown’s best month of collection over the past two years was $ 5,092,100 in March 2019.
To see how much the pandemic has affected the city’s income tax rallies, compare the city’s revenue last November to the previous two years. The amount last November was $ 3,325,767. It was $ 4,172,800 in November 2019 and $ 4,515,800 in November 2018.
The city was close to its target amounts in the first four months of the 2020 survey – November and December 2019 and January and February 2020, as businesses have to delay taxes.
PANDEMIC BLUES
However, there has been a significant decrease in the post-pandemic.
The city’s 2.75 percent income tax revenue for 2020 was $ 43,866,000, which is forecast to equal $ 2,348,000. It was also $ 2,798,000 less than the $ 46,664,000 raised in 2019.
Miasek is working on projections of collecting income taxes for the city along with the 2021 budget, which must be approved by the city council by March 31. Income tax levied this year is expected to range between $ 43.5 million and $ 43.5 million.
“We had four healthy months last year,” said Miasek. “If we have COVID collections this year, we will have fewer than in 2020. Income tax will be lower than last year. We cannot predict a recovery in jobs. “
The sharp decline in income tax collections last year was offset by a series of large cash increases the city received – mostly $ 5.3 million in federal COVID-19 aid funds and a $ 2.8 million discount to the city Compensation for employees. Miasek said state officials have said there will be no employee compensation discount this year and federal COVID-19 relief is uncertain.
The city saved $ 400,000 in employee volunteer vacation days and another $ 400,000 in spending cuts last year.
That left the city with roughly $ 6.5 million in surplus in its general fund as of this year, the most recent in recent times.
But it won’t be long, said Miasek.
“We have to use half of the surplus to offset in 2021,” he said. “We’re going to need that money for a properly sized government if that’s our new tax base. We don’t know what the future will bring. When things get better, great. If not, we need to be prepared. We need to use these reserves wisely to prepare what the future job market in the city will look like. “
‘NAKED BONES’
Councilor Lauren McNally, D-5th Ward, Chair of the Finance Committee, said: “2021 will not be easy. We can only put so much money aside for the future. We already have bare bones. What we collect, we spend because we have to. We don’t have many places left to make cuts. “
She added: “Without the bailout funds, we would not have balanced our budget either last year or this year. If we go into this year’s budget, we won’t be doing much with new equipment. We’ll reassess that six months later when things change with a stimulus package. “
The city will budget this year with the expectation that it will not receive any additional federal or state funding to improve its financial position, McNally said.
Miasek also said he remains concerned about a proposal to repeal a change in state law that would allow communities that collect income tax to continue doing so from people who work there but are now home-based during the pandemic .
Youngstown receives roughly 85 percent of its income tax from those who work in town and live outside of town, he said.
If the city had to repay that money and / or were not allowed to collect it, it would mean a significant loss of income, Miasek said.
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