Columbus Dispatch...
Local officials worry that improving tax revenue won’t offset state cuts
By Elizabeth Gibson and Doug Caruso
Monday, June 27, 2011 

Economic recovery helping, but complications lie ahead... 

Columbus and the area’s most-populous counties are collecting more taxes as the private sector recovers. 

But “the economic recovery is not enough to cover the loss of state support” to local governments, Franklin County Administrator Don Brown said. “We’ll see no growth. We’ll actually have to cover the loss by trimming the budget and services.” 

Columbus City Auditor Hugh J. Dorrian sees the same trend: “Things are fine this year,” he said. “We’ve got a significant problem next year already starting.” 

He’s predicting that Columbus could end the year with $26.3 million more in income-tax collections than in 2010, a 5.5 percent increase. But Dorrian is telling the mayor and the City Council not to spend that money. 

Income taxes are the main form of revenue for Columbus, while counties rely primarily on sales taxes. Lately, those numbers have been looking good for most central Ohio counties and in the Cleveland and Cincinnati areas. 

In Franklin County, sales-tax receipts for the first five months of the year were up 6.14percent compared with that period last year. This year’s collections are already $2million ahead of projections, and the revenue has risen above 2008 pre-recession levels for the first time. 

Columbus’ income-tax collections, even after accounting for the 25 percent tax increase voters approved in 2009, are also the best they’ve been in at least three years, Dorrian said. Income taxes pay for most of Columbus’ operating budget and a significant portion of its capital budget. 

Meanwhile, property-tax collections - which are a main source of money for school district and township budgets - have managed modest gains throughout the recession. But they’re expected to take a hit starting in November, at least in Franklin County. Residential property values are expected to drop because the Franklin County auditor’s office is performing the first reappraisal since before the recession 

All local governments are carefully watching the state budget, with legislators expected to cut about $540 million from their funding over two years. 

Franklin County officials expect state cuts to cost the county $15.9 million this year, $30.4 million in 2012 and $37.9 million in 2013. 

Columbus officials expect to lose $4 million to $5million in state local-government funds this year. That would grow in 2012 to $15 million, along with a loss in property taxes of about $5 million, said Paul Rakosky, the city’s finance director. And in 2013, the city could lose another $20million in local-government funds and about $9million if the estate tax goes away. 

“It’s just a pileup that keeps building and continues to challenge us,” he said. “We’re going to have to carry over as much as we can to offset those cuts.” 

Councilwoman Priscilla R. Tyson said that despite growth in tax revenue this year, she and other council members are taking a cautious approach. 

“We just hope that with our income taxes being up, we would look at carrying over dollars for next year,” said Tyson, who leads the council’s finance committee. 

Revenue from the new casino isn’t expected until late 2012, and investment revenue has been in the dumps, so city and county officials said they aren’t expecting any help there. 

Overall, central Ohio has fared better than a lot of the country, and it seems to be recovering faster, too, said Bill LaFayette, vice president of economic analysis for the Columbus Chamber. 

“Central Ohio has been an island of economic stability over the past three years,” Brown said. “Our sister counties around the state tell us that we’re lucky.” 

But there’s a catch, Brown said. Central Ohio has done well in part because the state capital has so many public-sector jobs. 

“Unfortunately, as the private sector recovers, the state and local government will be shrinking, and that’s going to dilute the growth in the private sector in central Ohio 

LaFayette said 17.5 percent of the region’s jobs are in government, but there are plenty of other growth sectors. 

Dorrian noted that Ohio State University and Nationwide Children’s hospitals will be bringing in many high-paying jobs as they expand.

There are also signs that the state economy as a whole also is recovering. County officials hope that the state ultimately will restore some of the local-government funding as its tax collections increase. 

Read it at the Columbus Dispatch