Ohio's cities, because they are heavily reliant on income taxes, are especially vulnerable to the immediate impact of coronavrius-related employment reductions, according to some researchers.
The Dayton Daily News will take an in-depth look in Sunday’s newspaper on how this has already impacted city governments.
Dayton already has furloughed 479 workers, and the city has asked department directors to look at making 18% budget cuts across the board, said Dayton Mayor Nan Whaley during an Ohio Mayors Alliance conference call on Thursday.
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“Ohio’s cities are uniquely vulnerable to the impending economic tsunami because our communities rely primarily on income tax revenue,” said Whaley, who is on the alliance’s board.
Municipal income taxes make up as much as 80% of Ohio cities’ general operating funds, according to Ohio Municipal League Executive Director Kent Scarrett. Early projections estimate a 10 to 20% drop in income tax revenues for cities in the state, records show.
In Kettering, about 70 percent of the city’s budget funds public safety, said Mayor Don Patterson.
“Cuts are going to have to be made if we can’t get this relief and get it quickly,” Patterson said.
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Except for police and fire, the city of Dayton has furloughed workers in essentially every department, including public works, finance, aviation and the city commission office, Whaley said.
If the federal government does not provide bailout help soon, Dayton and other Ohio’s cities will have to reduce services that are vital during this crisis and will be critical during the economic recovery, Whaley said.
Front line and emergency services like police and fire are at risk of layoffs because they make up such a large part of cities’ general fund budgets, she said.
Public sector layoffs and budget cuts would be a drag on the economic recovery when it happens, she said.
“Congress could do something tonight — tomorrow — to make this a completely different conversation for us,” Whaley said.
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The Ohio Mayors Alliance wants Congress to pass a Phase 4 coronavirus economic rescue bill that sets billions of dollars aside for state and local governments.
Ohio cities are especially vulnerable to income tax losses caused by COVID-19 business shutdowns, a Brookings Institution report shows.
Four of the top five cities in the U.S. with the most immediate fiscal impact from the coronavirus are in Ohio, including Columbus, Cincinnati, Toledo and Cleveland, which all have a higher percentage of “share of general fund revenues from elastic sources,” according to the report.
Those cities rank first, second, fourth and fifth, respectively, in the U.S. with the most immediate fiscal impact from the coronavirus, the organization said.
Cincinnati Mayor John Cranley said he has spoken with the offices of Ohio U.S. Sens. Sherrod Brown, Rob Portman, and U.S. Reps. Steve Chabot and Brad Wenstrup about why cities have been excluded from federal relief so far.
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“This is not partisan,” Cincinnati Mayor John Cranley said. “It’s not ideological. It’s unique to Ohio” impacting cities that are “rural, urban, suburban, Republican and Democrat.”
Cranley said that about 75% percent of Cincinnati’s estimated $400 million budget is contingent on income tax revenue and funds “sworn police, fire, garbage collection and public health.”
“It is suicide for all us to have to deal with a $100 million cut,” Cranley said. “And it will set Ohio back and all of our cities back for a generation.”
On Thursday, Sen. Brown said Ohio’s mayors face major financial challenges and know best what resources their cities and towns need to keep their residents safe and healthy while weathering.
“Our mayors are facing major financial constraints and know best what resources their cities and towns need to keep their residents safe and healthy while we weather this pandemic,” he said.
Three-fourths of Columbus’ general fund comes from income taxes, and 16% of its regional employment is in industries highly vulnerable to coronavirus-related layoffs, including transportation, employment services, leisure and hospitality and travel, Brookings said.
Brookings says about 70% of Dayton’s general fund revenue comes from elastic sources, and about 14.7% of metro area employment is in vulnerable industries, putting it at midterm risk of revenue collapse.
Dayton’s income taxes account for about 65% of its general fund revenue while Kettering’s provides about 79% for that city, officials said.
U.S. Sen. Portman on Thursday said Ohio has received nearly $2.3 billion from the third stimulus bill Congress passed, which is about half of what Ohio state and local governments will receive in federal support.
Governments eligible for payment must have a population of more than 500,000 people, according to the Treasury.
Local governments with populations over 500,000, including Montgomery County and the city of Columbus, are applying for funds, Portman’s office said.
