Miasek cautious, concerned about city’s February income tax shortfall

YOUNGSTOWN — A $700,000 drop in the city's forecasted income tax revenue for February has Finance Director Kyle Miasek concerned — but he said he needs more data before coming to any conclusions.

Miasek said the city forecasted income tax revenue of $3.7 million for February, but collected just $3 million. The largest decline was $500,000 in employer withholdings, which is the most important area, he said.

Miasek is concerned that the city went into the month of February on target and then dropped by 6 percent in one month. He added he is unaware of any large operations or business closings in Youngstown that would cause such a large impact in one month.

The city collects income tax in January, February and March for income that was earned in December, January and February.

For the first three months in 2020, the city collected about $11.9 million in income tax. Miasek said he forecasted the city to collect about $11.6 million in income taxes for the first three months of 2021. Instead, the city has collected about $10.9 million.

For 2021, the forecasted amount for December was $3.66 million and the city received $3.58 million, which is about $4,000 less than forecasted. In January, the forecasted amount was $4.1 million and the city received about $4,500 more than anticipated.

Miasek said the first three months of 2020 were not yet affected by the pandemic. This year, Miasek estimated in the income tax forecast that the amounts would be lower due to the pandemic.

Miasek said there are several factors that could have contributed to the significant decrease in February, including seasonal work, when people make income tax payments and that February is only 28 days. Miasek said he needs another month for more data to figure out why there was such a large decrease in one month.

"It's all going to be dependent on what our number is [in April]," Miasek said.

He said it's possible the city could have a decent recovery in April, which is currently forecasted at $3.85 million.

"I do not believe the severity of the drop is going to repeat itself," Miasek said.

If there is another significant drop next month, Miasek said he will start researching to see why the city is not meeting the forecasted goal.

The city has a general fund surplus of about $6.5 million that is being used to balance the budget. The surplus comes from about $5.3 million in CARES Act funds, about $2.8 million in three workers' compensation rebates from the Bureau of Workers' Compensation and about $400,000 in savings from employees who were asked to go on furlough.

Miasek said as of now, the February deficit won't impact the 2021 budget, which is expected to be approved by City Council before the end of the month.

However, if the income tax collection is off again in March, some of the surplus funds might be used as a way to balance out the budget — though he does not advocate adjusting the budget yet since it's too early in the year.

"That's why one month you should not get alarmed," Miasek said. "I'm just surprised though that the drop was so dramatic against my forecast."

Miasek said he will keep City Council informed when the city collects next month's income tax on April 15.

This story was originally published March 18, 2021 at 5:11 AM with the headline "Miasek cautious, concerned about city’s February income tax shortfall."