DAYTON — The Dayton area is seeing positive growth in income tax and business tax revenue, a sign the local economy is rebounding and more people are working.

City budget officials reported Wednesday tax revenue collections are up $1.8 million above original projections through April, but warned the growth will be negated by state cuts in local government funding implemented the second half of this year.

“We are expecting about $2 million (in cuts) from the state,” Assistant City Manager Stanley Earley said. “We expect (the state cuts) to remove about $9 million (from Dayton’s budget) by 2013 so we need to be aggressive and not wait.”

Gov. John Kasich has proposed cuts to money given to local governments in order to help fill the state’s $7.7 billion budget gap by 2013.

State law requires governments to balance their budgets.

City Manager Tim Riordan said last week he decided not to ask voters to approve an income tax increase, but instead notified department heads they will have to cut as much as $10 million collectively from the general fund budget heading toward 2012.

He said the city’s budget of $154 million is at or below the city’s operating budget in 1995, though the city’s population has declined by more than 26,000 since then.

On Wednesday, Riordan said he’s unsure how many of the city’s roughly 1,200 employees paid through general fund revenues will lose their jobs and said “everything is on the table.”

He said a reduction plan will be in place by July.

Commissioner Nan Whaley said despite the cuts, it could be worse since revenues are up after 10 straight years of decline.

The Dayton area has about 370,800 jobs, about 1,100 more than in April 2010, according to the U.S. Department of Labor.

Ohio’s unemployment rate fell to 8.6 percent in April, below the national average of 9 percent. Montgomery County’s unemployment rate was 9.2 percent in April.