For the first time since the city increased the income tax to 2.5 percent in 2009, per-capita income tax collections slipped last year, and the city is preparing for the possibility that it won’t grow again in 2019, according to data from Auditor Megan Kilgore.

More people are calling Columbus home every year, but the biggest source of funding for filling potholes, clearing snow and providing other city services isn’t keeping up.

For the first time since the city increased the income tax to 2.5 percent in 2009, per-capita income-tax collections slipped last year, and the city is preparing for the possibility that tax revenue won’t grow again in 2019, according to data from Auditor Megan Kilgore.

That means that every dollar the city collects is spread a little thinner across the services it provides.

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“I am confident that the Columbus economy is experiencing negative wage and workforce impacts that are going to change the way that the city has to look at funding its essential city services,” Kilgore said. “It’s very concerning.”

Officials in Mayor Andrew J. Ginther’s administration say they are keeping an eye on income-tax trends as they monitor spending, craft the 2019 capital budget and try to attract jobs to the city.

Columbus has developed a reputation as a growing, thriving city, and its population indeed is growing. The number of residents will rise to 925,000 this year, up 5 percent since 2017, according to estimates from the Mid-Ohio Regional Planning Commission. Over the same time, though, Kilgore's office expects per-capita income-tax collections to slip by 1.3 percent.

The share of the city’s population that is working or seeking work has dipped in the past three years, too. Columbus economist Bill LaFayette said that means more people aren’t earning paychecks or paying income taxes. Some of them could have aged out of the workforce and retired while others might be underqualified for the available jobs in Columbus.

“We’ve got workforce-availability problems,” he said. “People are not entering the labor force at the same rate that they have been, simply because we’re getting towards full employment, and people just don’t have the skills that employers need.”

Michael Wilkos, senior vice president at the United Way of Central Ohio, said he thinks Columbus has a wage problem. Between 2000 and 2016, the city netted an additional 38,466 households. That includes 27,339 households that earned no more than $25,000 a year — about $12 an hour for a full-time employee.

Columbus lost about 7,000 households earning more than $75,000 apiece during that period, he said.

“Even though the city is growing, I think what is important to acknowledge is that growth and prosperity are not the same thing,” Wilkos said.

There's a net flow of income out of Franklin County, according to data the IRS collects on the movement of people who file federal income-tax returns.

About 1,000 more households moved out of Franklin County between 2015 and 2016 than moved in, according to the IRS migration data for those two years, the most recent numbers available. Households — represented in the data as one tax return — who moved out reported a total of $391 million more in adjusted gross income than the households who moved in, the data show.

Census estimates say the populations of both Franklin County and Columbus have been growing for years; those numbers include births as well as migration. The IRS data covers counties, not cities, so it's unclear exactly how much of the outward migration comes from Columbus.

Kilgore’s data showed that the growth rate of income-tax withholdings collected from employees slowed at four of the 10 largest employers in the city.

Small changes at large employers can make a big difference in income-tax revenue, she said. When it’s not growing, "it really hurts our city’s ability to spend,” she said.

Columbus Finance Director Joe Lombardi said it's too early in the year for the city to draw conclusions about 2019 income-tax collections, but the city can rein in spending throughout the year by waiting to fill openings or eliminating vacant positions. It also will consider revenue as it develops the capital budget.

Schoeny said the city has an ordinance that any businesses that receive incentives must pay workers at least $15 an hour, and it is looking at ways to turn sites that once produced jobs into areas that can be redeveloped.

He cited CoverMyMeds as a success story. The city gave the company $83 million in tax incentives to build a corporate campus west of Downtown where it plans to add more than 1,000 employees. That includes the city returning $4.5 million to $5.3 million in income-tax withholdings from those employees to the company. Local schools also will receive a portion of city income-tax collections in that deal.

”I would rather have 50 to 65 percent of a big number than 100 percent of nothing,” he said.

Dispatch Digital Editor Doug Caruso contributed to this story.

rrouan@dispatch.com

@RickRouan