Cities struggle to pay bills

While some communities spent the last five years struggling to collect enough income taxes to cover their budgets, others have an abundance.

Girard and Lordstown, for example, have been using a boost in their tax collections to recover from years of debt and long-neglected capital improvements.

Girard’s income tax revenue would have seen a decline in the last several years without the hundreds of thousands of dollars that came with the multi-million dollar expansion of the Vallourec Star pipe mill. Vallourec Star was formerly known as V&M Star.

Mayor James Melfi said he tracks his city’s income tax collections with and without the dollars associated with the mill.

“We consider it (taxes from the construction) one-time money tied to the specific project,” Melfi said.

In the last three years, tax dollars other than from Vallourec Star construction declined from $3.53 million in 2011 to $3.24 million in 2013. The city collected $2.92 million in 2010 and $2.97 million in 2009.

But the amount collected from the expansion increased every year, beginning with $11,300 in 2010 to $1.03 million in tax income from construction in 2013.

The city has used some of the Vallourec Star construction money to pay down debts and purchase equipment.

“During the years we were in fiscal emergency, we did not replace a lot of equipment,” Melfi said. “We’ve replaced some equipment and purchased three dump trucks.”

The city purchased five new police vehicles, including four cruisers and an undercover vehicle. It also added $50,000 for road and street improvements and paid off some debts.

Melfi expects to see withholding from Vallourec Star to level somewhere between $300,000 and $400,000.

Lordstown Village leaders have not had to stretch their dollars to reach annual budget projections. In each of the last five years the village’s budget projections were significantly below the amount collected.

The closest it came to having its budget projections matching what it actually earned was in 2009, when budget projections were $3.1 million and the village collected $3.2 million in taxes.

Since that time, the village has recorded an increasing amount of tax revenues over budget projections. Village leaders budgeted $4.2 million in taxes during 2012; it collected $7.67 million.

“A lot of that money was from profits earned at the General Motors plant,” Mayor Arno Hill said. “The General Motors plant did not earn a profit for many years. It has just been in the last four years that it began earning profits.”

Hill said tax dollars that come into the village are divided: 35 percent goes to the general fund; 35 percent for debt reduction of the Eastside Sanitary Sewer district; 25 percent for capital improvements; and 5 percent for the maintenance and repairs of streets.

The installation of the Eastside Sanitary Sewer District cost the village an estimated $10.3 million and is being paid through a 20-year bond.

“We cannot pay off the bond early or we would have to pay the interest that bond purchasers are expecting to gain, ” Hill said. “We are putting money in our debt services account over the next three to four years, so when the payments are due on the sewer project, we will be able to pay directly from that account.”

The village currently owes $7.98 million on the sewer project and it already has $3.65 million in its debt repayment account.

Hill said the village went for years without doing any capital improvements, so it has been investing in capital improvements efforts now to catch up.

“We are being fiscally prudent,” Hill said.

Hubbard’s income tax budget projections have been close to what was actually collected in each of the last five years, within 1 to 2 percent of their projections. In four of the five years, the city collected more than was expected.

Mayor John Darko credits the city being so close to target to the work of city auditor Michael C. Villiano.

“We are very conservative in our revenue numbers and budget accordingly,” Darko said. “We have been seeing a slow but steady growth in our community, and our tax collections have increased accordingly.”

Evets Oil and Gas Constructions Services is expanding and is expected to increase the amount of plant fabrication services in its Hubbard facility later this year, and Countryside at Elmwood, an assistant living complex, is expected to open in 2014. Both of these businesses will add new local jobs and increase the city’s tax base.

The amount of municipal income taxes collected in Niles has increased incrementally every year since 2010, according to figures from city auditor Charles Nader.

In four of the last five years, city officials have been projecting budgets that have been several hundred dollars less than the amount collected in taxes, so it has managed to stay within its budget.

“City administrators do not want to be placed in the position where they plan spend more than is being collecting in taxes,” Bob Swauger, the city’s treasurer, said. “We need to have money available in case of emergencies.”

In three of the last five years, Newton Falls village collected less in taxes than the amount it budgeted in annual forecast. In 2009, 2010 and 2013, Newton Falls collected a combined $146,296 less than what was budgeted. In 2011 and 2012, Newton Falls tax collections were a combined $106,307 more than projected.