But city officials say the rosy revenue numbers don’t change the fact that Dayton still faces daunting budget challenges since many people who formerly worked in the city, especially downtown, now work from home, possibly permanently.
Through the first half of this year, Dayton has received $74.7 million in income tax revenue, which is up 11.2% from the same period in 2020.
Of course last year was unusual because of the coronavirus crisis, and income tax collections fell as the business community went into lockdown mode, with some scaling back or closing.
However, Dayton’s revenue from its earnings tax is also up significantly in the first two quarters of this year compared to 2019 (+8%) and 2018 (+10.5%).
Revenue from withholdings has grown 3.6%, compared to last year, rising to $62.9 million.
But business profits are the real story: These collections shot up nearly 65%, to $9.4 million.
Half of the increase in earnings tax collections comes from business profits, and city budget officials say corporate profits were the main driver ― not receipts from partnerships.
What is happening in Dayton is not unique. U.S. quarterly corporate profits rose sharply in late 2020 and early 2021, according to the U.S. Bureau of Economic Analysis.
Some local industries were devastated in 2020, while others thrived, but overall, there has been positive growth this year, said Holly Allen, vice president of marketing and communications with the Dayton Area Chamber of Commerce.
“We’ve seen promising trends across the board,” she said. “For the most part, existing businesses are doing well, regardless of how the worst of the COVID pandemic affected them.”
Many business leaders say the only thing holding them back from having an incredible year are workforce and supply-chain issues, she said.
To address supply shortages, employers are trying to get creative with innovative ways to attract and keep talented workers, she said, and the chamber is working with businesses on large-scale solutions.
Dayton has seen significant job growth at new warehouse, distribution and industrial facilities around the Dayton International Airport.
The city and Montgomery County on Tuesday are hosting a job fair at the airport to link job-seekers with employment opportunities around the aviation facility, including with Crocs, Chewy, Frito-Lay and multiple airlines.
Also, notably, new business filings have broken records, as many people decided to start new ventures and follow their entrepreneurial dreams at a time of uncertainty in the labor market and broader economy.
Shannon said it is unrealistic to think the city will continue see such explosive growth in tax revenues from business profits moving forward.
The city’s general fund also could suffer a major blow because an estimated one-quarter of workers are now working remotely and many may not ever return to the office, city officials said.
“We can enjoy these robust gains, attributable to corporate profits, but this is not sustainable,” Shannon said.
Dayton has been awarded nearly $138 million in federal rescue funds, and the city has estimated it will need to put about $16 million toward revenue replacement to make up for financial losses tied to the pandemic.
But this is one-time money, and the city needs long-term budget solutions if work-from-home puts a squeeze on general fund revenues, officials said.
Dayton needs to continue considering cost-containment measures until the city has a better idea of how much funding it stands to lose from changes in work arrangements, said Dayton City Manager Shelley Dickstein.
“While it is very nice to have this kind of revenue growth, I’m still very concerned about expenditures and how to manage moving forward if some of these threats really develop,” she said.
Corporations have seen strong economic gains, but local payrolls still have a significant climb back to pre-pandemic levels.
About 376,600 people were employed in the Dayton metro area in June, which is 18,300 fewer jobs than in January 2020, before the pandemic took hold, according to preliminary data from the U.S. Bureau of Labor Statistics.
The metro area includes Montgomery, Miami and Greene counties.
Leisure and hospitality has 2,800 fewer workers than it did in January 2020 (-7.3%).
Manufacturing has 2,100 fewer workers (-4.8%); government, -2,800 workers (-4.5%); and education and health care, -4,100 fewer employees (-5.4%).
Construction has added 1,500 people to the payrolls since early 2020 (+11.4%), while trade, transportation and utilities have gained 1,900 workers (+2.9%).
Construction has been booming in the region, with entirely new projects and additions and expansions. The trade, transportation and utilities industry accounts for most new jobs around the Dayton airport.
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