The city of Dayton’s income tax collections are up about $4.4 million this year, exceeding projections and offering signs the local economy is going strong.
The revenue growth — which coincides with a long streak of year-over-year job gains in the region — hopefully will mean the city will not have to dip into its cash reserves this year, said Diane Shannon, Dayton’s director of procurement, management and budget.
The city has projects and equipment on its to-do list that it has waited to fund, but it also has promised specific use of money from the income tax increase voters approved in 2016, she said.
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Collections from Issue 9, the tax hike, are committed to enhanced mowing, increased street repairs, universal pre-school, maintaining emergency services levels and other investments.
The revenues from Issue 9 are $300,000 over the city’s projection and $1.6 million over last year’s collections.
Revenues are performing nicely, said Dayton Mayor Nan Whaley, but she said the city is being conservative with its budget projections to avoid running into trouble.
“I think we feel really good about where we are,” Whaley said. “It shows that the work that we’ve done to get on firm financial footing is working.”
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The U.S. economic expansion is now the second longest on record, and the city wants to be prepared and have a financial cushion if the economy enters a recession, officials said.
“In a garden-variety recession, our income tax collections have dropped about 4 percent,” Shannon said.
Through the end of May, the city has collected $57.3 million in income taxes, which includes about $5.6 million in revenue generated by Issue 9, the city’s income tax hike.
In November 2016, Dayton voters approved increasing the city’s earnings tax to 2.5 percent from 2.25 percent for eight years. Issue 9 was Dayton’s first tax increase in 32 years.
Income tax collections are up 8.2 percent over last year and about $3.2 million over Dayton’s forecast, the city said.
More than half the increase in income tax revenue came in January, which was an increase of 23 percent from January 2017, before Issue 9 money started coming in. Business profits have increased, and the city received a sizable delinquent payment.
The underlying revenue growth is likely closer to 3 to 4 percent, when factoring out some one-time funding, Shannon said. However, she said that’s still good growth.
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The city expects to collect about $11 million per year from Issue 9 during the eight-year levy term. But Shannon said that’s the projected average, and collections could fall short of that mark if the economy contracts.
The city wants to be sure it can fund its Issue 9 commitments even if revenues drop, and it wants to avoid using its cash reserves and maybe even add to them, officials said. The city’s general fund budget included spending $1.7 million out of its savings.
Mayor Whaley, however, acknowledges that the city could run into some headwinds.
Good Samaritan Hospital is set to close at 12:01 a.m. July 23, impacting about 1,600 jobs in the northwestern part of the city.
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Many jobs will move to Miami Valley Hospital, which also is in Dayton, but some are expected to relocate to medical centers in other suburban communities.
“We’re worried about that,” Whaley said.
The region’s job growth is positive, Whaley said, but many high-paying jobs that were wiped out during the downturn have been replaced with lower-paying positions.
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