Dayton-area cities brace for income tax loss, cuts from COVID-19

Concern over income tax revenue from job losses in the state has the Ohio Municipal League pushing for Congress to include cities in a future COVID-19 relief package. FILE
Concern over income tax revenue from job losses in the state has the Ohio Municipal League pushing for Congress to include cities in a future COVID-19 relief package. FILE

Dayton-area cities are bracing to lose tens of millions of dollars collectively in income tax revenue because of business shut downs from COVID-19, and some have already made budget cuts.

Dayton, Lebanon, Trotwood and Xenia have sliced spending plans, with 479 city workers already furloughed in Montgomery County’s largest city.

Beavercreek – which has no income tax – and West Carrollton are among those considering cuts, and Kettering City Manager Mark Schwieterman said, “We anticipate significant reductions” in certain areas.

Centerville, Miamisburg and Oakwood officials say they have not started to seriously discuss decreases in spending. Some early projections show cities may lose 10 to 20% percent of 2020 projected income tax revenue.

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“We’re looking at our budget issues that are coming down pretty heavy right now,” said Dayton Mayor Nan Whaley, whose city has asked department heads to look at making 18% cuts across the board.

The income tax revenue losses brought on by job cuts at businesses during the coronavirus pandemic shutdown is expected to hit Ohio cities especially hard because those taxes constitute up to 80% of general operating funds, according to the Ohio Municipal League.

Whaley and Kettering’s Don Patterson are part of a group of Ohio mayors who say cuts in local public safety forces will be needed if cities do not receive COVID-19 rescue funds from Congress in the near future.

“While our individual situations are unique, they’re common,” Patterson said of Ohio cities. “One of us may have 70 police officers. The other one may have 500. The problem is we’re all faced with the same problem.”

The state’s municipal league is also pushing for a Congressional bailout.

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Without a substantial financial injection, cities “will be forced to consider staffing cuts to critical services,” including health departments and first responders, according to a letter from the group to Ohio’s Congressional delegation. “These cuts would be devastating in the midst of the worst public health crisis in American history.”

Kettering was projecting to get about $52.2 million – roughly 79% of its general fund budget – from income tax collections, Schwieterman said.

Cities across the region have shuttered programs and have eliminated face-to-face interaction with the public since Gov. Mike DeWine’s stay at home order, which will be lifted on a limited basis starting May 1.

Meanwhile, “we anticipate significant reductions in equipment and infrastructure improvements as well as cancellation of some programs and events,” Schwieterman said in an email a day before DeWine’s Thursday announcement.

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Decisions on Kettering cuts – and further cuts in Dayton – should come in the next 30 days, officials said.

Trotwood has frozen all non-essential hiring and spending, as well as deferred capital projects, City Manager Quincy Pope said.

“As unemployment claims continue to grow and people are not working, municipalities like Trotwood could realize unprecedented revenue loss in income tax receipts,” he said in an email.

Cuts in Lebanon have totaled about $600,000 for this year so far by trimming overtime, deferring purchases and hiring freezes, City Auditor Dan Burke said.

Xenia is not filling several public safety positions about to be vacated due to retirement and “various public safety capital purchases and projects….have been postponed or will be drastically altered,” according to City Manager Brent Merriman.

Cuts have been discussed in Beavercreek, one of a handful of Ohio cities without an income tax, City Manager Pete Landrum said.

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The city expects to lose projected revenue through a number of tax collections such as the state’s local government fund, and lodging, property and gasoline taxes, he said.

Department heads in West Carrollton are examining cuts, City Manager Brad Townsend said. The city – which is seeking a tax increase on this spring’s ballot to eliminate future temporary shutdowns of fire services - is delaying purchases and, possibly, road projects.

“Don’t know that yet,” Townsend said. “It’s possible that we could do it in the fall …. till we see what the hit’s going to be.”

The focus in Centerville has been residents’ health and safety, and assisting local businesses during the shutdown, said Wayne Davis, city manager.

“At this point, we know that COVID-19 shutdowns are going to affect our income tax revenue,” Davis said in an email Thursday. “We are mindful of the potential impact …. However, we still have more questions than answers, and it is too soon to forecast actual impact.”

Talk of spending cuts or deferments has not started in Oakwood, City Manager Norbert Klopsch said.

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“Given that the vast majority of our income tax is earned in other jurisdictions, it is impossible for us to accurately estimate the potential losses, particularly at this point in time when the duration of the pandemic is unknown,” Klopsch said.

“Once the statewide shutdown has passed, and normal business operations are restarted, we will attempt to estimate a loss, but it will include some major assumptions,” he added.

Miamisburg has not yet talked about the impact of the income tax losses. A quarterly financial report is set to given at Tuesday’s city council meeting.