McDONALD — Village Council has approved a change to the income tax forgiveness policy, where residents who work outside the village and pay income tax elsewhere will still need to pay a percentage to McDonald.

Mayor Ray Lewis said residents who work in other municipalities and pay income tax to another municipality currently receive a 2% credit for forgiveness on the tax the resident pays to the other municipality.

“The majority of our residents who are working are not currently paying village income tax,” Lewis said.

Of the village’s 3,000 residents, he said, around 1,200 tax returns are from working residents paying some form of income tax. The majority of these 1,200 taxpayers do not work in the village and pay income tax to another municipality and nothing to the village.

Lewis said starting in 2026, the village will still forgive 1% of the residents’ income tax, and 1% will be owed to the village.

Lewis said the decrease in jobs in the community has negatively impacted the municipal income tax collected by the village.

Councilman Don Smith, chairman of the finance / capital improvement committee, explained, for someone working in Lordstown, which has a tax rate of 1.5%, “Starting next year, we will only give 1% credit to that resident, so their tax to the village will be .5%.”

Smith said for those working in Niles, Girard or Warren, where the income tax is 2% or more, the village will now only give credit for 1%, with the other 1% to be paid to McDonald.

Lewis said this will vary depending on the income tax rate of that municipality.

Smith said that with the closing of McDonald Steel, the village has seen an approximate $200,000 loss in tax revenue from the employees who worked there.

He said in 2023, the village had 1,443 income tax filers, of which 1,203 paid other municipalities and 240 paid McDonald income tax.

Lewis said that means 960 residents did not pay any income tax that year to the village with the forgiveness in place.

TRASH COLLECTION

In addition, for the first time, the village is having residents pay for the cost of trash collection.

Smith said previously the village covered trash collection costs.

Residents get trash collection from Ohio Valley, which is lower than many other municipalities, Smith said.

Smith said trash collection is around $14 per month or $45 a quarter.

“Our costs are rising, and tax revenue is decreasing. We are looking ahead at our finances. The income tax stream has begun lagging, and this year we have begun experiencing that shortfall in tax revenue. We do not expect that to increase in 2026,” Smith said.

He said the village is going through two steps to mitigate the loss of revenue: by decreasing expenses by passing the cost of trash collection on to the residents, and the other to try and increase revenue through the income tax credit reduction for income taxes paid to other municipalities.

“If we want to remain a solvent municipality, we are limited in options. Village Council is leaving no stone unturned in looking at all avenues to generate revenue,” Lewis said.

Council also gave first reading to 5% pay increases effective in January to village employees, which include 10 office staff, water and road department workers who are all full-time and a part-time building / zoning inspector.

The building inspector will increase from $550 to $577.50 per month.

Lewis said rental inspections pay the costs for the building inspector with no additional drain on the budget.

The fire chief will increase from $629 to $1,250 per month.

Lewis said the fire department has increased its revenue and there has been a shifting of funds with no change to the budget.

He said the village is no longer paying for an assistant fire chief.

The fiscal officer will increase from $19.60 to $20.58 per hour.

In other business at Wednesday’s meeting, council joined the Youngstown / Warren Regional Chamber, which will help provide the village with information and resources regarding data centers.

“We are trying to be proactive and be informed and keep our residents informed. The chamber will help provide us with unbiased information and resources on data centers and other businesses,” Lewis said.

Council is also seeking to fill one opening on council since no one applied to run in the Nov. 4 general election.

Smith said interested residents can submit an application at the village municipal building by Dec. 31.

Council announced Christmas in the Village will be 6:30 p.m. Saturday at the park and municipal building. McDonald High School football coach Dan Williams will light the tree.