Cincinnati councilmen: City might need to raise earnings tax

Sharon Coolidge | Cincinnati Enquirer

Cincinnati Mayor John Cranley's proposed 2019 budget, unveiled Wednesday, would create five new litter cleanup teams, put mapping technology in police cruisers and cut all city funding for the Center for Closing the Health Gap.

Now it's up to City Council to review the proposed budget, make changes and approve it by June 30.

"These are tough choices," Cranley said.

The city is facing a $32 million deficit.

Council's Budget and Finance Committee was briefed on the budget for the first time Thursday afternoon. And, while structurally balancing the budget is possible, Councilman Greg Landsman said it's time council considers raising the earnings tax.

First, there were cuts, and now fees are expected to increase significantly to help cover the shortfall. So it's time to bring in new revenue, Landsman said. For years, council has kept the earnings tax at 2.1 percent. In comparison, other cities in Ohio collect 2.5 percent.

"Property taxes have increasingly gone up," Landsman said. "I think the average homeowner is really struggling with their property taxes. ... That is the absolute last resort."

An earnings tax affects businesses and those who work in the city – whether or not they are city residents. It would have to be approved by voters.

"We may get through this budget with some fee increases and big spending cuts, but ultimately if we want to have the city people that people expect in terms of our ability to deliver great services, to invest in our infrastructure and to take advantage of opportunities to expand growth then we're going to have to change our revenue picture," Landsman said.

Councilman David Mann, chairman of the budget committee, agreed. He said the idea should be vetted over the next year.

In the meantime, council has to work through the 2019 budget.

According to the city charter, the city manager draws up a budget, then gives it to the mayor for input. The budget then goes to Cincinnati City Council with the mayor's revisions for final approval. The process is off to a late start this year after City Manager Harry Black was ousted from his job in April.

The city operating budget for fiscal year 2019 is projected at $406 million, up $10.2 million from 2018. The budget year begins July 1.

Acting City Manager Patrick Duhaney released his proposed budget last week, slashing social services, raising fees and warning that parking would cost more going forward.

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Cranley restored funding to several – but not all – of the agencies and isn't raising fees as much as Duhaney suggested.

Cranley added or restored money for:

More litter cleanup, with 15 new, permanent jobs to pick up trash and a strengthened partnership with Keep Cincinnati Beautiful.

Mapping technology for police cruisers, something officers didn't have when looking for Kyle Plush, a 16-year-old who died after becoming trapped in his car.

Two neighborhood investments: $850,000 for the Pleasant Ridge business district so the corner of Montgomery Road and Lester Road can be developed and $2.5 million to restore the Masonic Lodge in East Price Hill, furthering redevelopment of the Incline District.

$450,000 for park maintenance and $450,000 for recreation center renovations.

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Those and other additions are expected to cost $6.8 million, of which almost $1.6 million will come out of the operating budget.

Cranley made cuts elsewhere in Duhaney's budget to pay for his proposals.

Most notably he took out all $562,500 proposed for the Center for Closing the Health Gap. The group works in the city's poor neighborhoods to promote better health care, with a goal of improving health for minorities. Led by former Mayor Dwight Tillery, the agency came under fire last year for some of its spending practices. Council members demanded the agency be held more accountable for how it spends tax dollars, but that never happened. A few years ago, at Cranley's recommendation, the Health Gap got $1 million a year.

Instead, on Wednesday Cranley proposed putting more money toward social service agencies whose outcomes are vetted by the United Way. Cranley said the Health Gap can seek money from that fund.

Councilman David Mann, chairman of council's Budget and Finance Committee, agreed the Health Gap's spending needs scrutiny. Last year the agency got $750,000 from the city.

"One, it's a lot of money; two, I want to see indications we're getting value for our money," Mann said. "I'm surprised measures were not put in place this year. I believe our motion required that."

Other spending Cranley cut from Duhaney's budget includes: