City income tax revenues fell short of what was budgeted in each of the last two years, by a total of nearly $1 million.
Tax revenues were $890,000 short of the budgeted amount of $17.84 million in 2013, and were $31,482.50 short of the budgeted amount of the $17.68 million at the end of 2012.
The actual amount collected in 2013 - almost $16.95 million - was the lowest total income amount collected since 2010, when the city collected $15.76 million. It was the second-lowest amount collected during a six-year span starting in 2008.
"Withholding declined in 2013 and in 2012," City Treasurer John Homlitas said. "There were companies that closed and companies that were purchased that are not operating at the same levels.''
Some of the newer jobs pay less, and some people moved out of the city, he said. Warren city's population is about 41,358 people, according to the July 2011 census data. It had a population of about 46,808, in the the 2000 U.S. Census.
"The city has an older population, so we have people who have retired, and their incomes are significantly lower than what they were earning when they were working."
In the six-year period examined, the only other year the city fell short tax revenues projected was 2009, when it collected $635,280 less than the $16.88 million budgeted.
The city in 2013 fell short in tax revenues in five of nine categories, including withholding, individual collections both current and prior year, business collection prior year and individual income tax estimated taxes.
On the flip side, the city collected more than budgeted at the beginning of 2013 in the current business taxes, penalties, interest and estimated business taxes.
The city collects 2 percent of taxes of those 2 who work in the city. For those who work outside of the city, but live in it, the city provides a credit of up to 2 percent.
The city has budgeted $13,750,000 for 2014 tax collections.
Mayor Doug Franklin said budget forecasts are developed at the end of the previous year area based on historical numbers and trends. The forecasts include knowledge that some companies, such as RG Steel or the GE Lamp plant, may be downsizing or closing.
"Throughout the year, we keep a constant eye on the amount of money coming into the city, so we can make adjustments accordingly," Franklin said.
Franklin said the city has been reducing spending through attrition. It has not replaced some retired employees, and in cases when replacements are hired, they are working at 60 percent of the cost.
Councilman Alford Novak, D-2nd Ward, said the city has been losing income tax dollars for more than a decade, starting with the downsizing and eventual closing of the Delphi Packard Electric plant.
"We had downsizing and cutbacks in our hospital systems where we have gone from three hospitals to two," Novak said. "As WCI Steel changed to RG Steel to Serverstal, we saw a reduction of people working every couple of years."
Although the GE plant did not close until last month, Novak said the number of employees was shrinking for several years, and that hurt income tax numbers.
Several of the major banks and credit unions in the area either consolidated or moved out during that period, he said.
Warren also has been hurt when companies in other communities, like Denman Tires, close, because city residents work in the businesses, Novak said.
"At one time, when the city was preparing its budget, we had unencumbered carryovers in which there were thousands of dollars left from the previous year to bolster the next year's budget," Novak said.
Councilman and former mayor Dan Sferra, D-at Large, said he can remember when the city had so much revenue that its leaders did not know how to spend it all.
"The answer to the falling income tax is jobs," Sferra said. "We lost thousands of high-paying jobs when Packard closed. It is a tough proposition facing communities across Ohio and the country. It is not just Warren."
Sferra said cities are not being helped by either federal or state government policies.
"(Gov.) Kasich is bragging on how he has been able to balance the budget, but his administration is doing on the backs local governments," Sferra said. "He is pushing costs down to the city level."
But the city is still responsible for the same amount of streets, sewers and other infrastructure as it was when it had 30,000 more residents and more city employees, Sferra said.
"One of the good aspects is our employees have been very cooperative," he said. "They have not had wage increases. They are paying more for their health care. They have shared the problem with us. It has been tough."
While the city has lost many jobs, Franklin said it added some in 2013 when the Kellogg Co. moved a distribution center into a site in the former LEEDS building, plus Premium Meats, Bottom Dollar, Family Dollar and several small businesses have opened in the city.