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Columbus Fiscal Problems Appear Worse Than Other Major Ohio Cities
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Columbus voters Tuesday will decide whether to raise the city’s income tax. Despite the state-wide recession, no other major city in Ohio faces the cuts Columbus faces. And no other city is asking voters for a tax increase. WOSU looks at some of the reasons why.
If the tax increase fails, the predictions are dire. Almost 600 Columbus firefighters and police officers – gone. Local recreation centers – gone. Other city services – gone.
“We’ve cut to the bone. And now we’re about to cut our limbs off,” Columbus Mayor Michael Coleman said.
That’s the picture Coleman and Columbus city officials have painted for residents. Coleman says the city faces a $115 million budget deficit next year, and the tax hike is a must to close the gap.
That means Columbus faces a deficit 20 percent of its operating budget. No other major Ohio city faces a deficit that large. They all face tight budgets and layoffs, but no other city is talking laying off hundreds of cops and firefighters.
Cleveland closed its 2009 deficit without layoffs, service cuts or tax increases. In his state of the city speech earlier this year, Cleveland Mayor Frank Jackson said for three years the city produced budget surpluses by cutting operating costs and collecting unpaid fines. This year Jackson froze all but essential positions and restricted travel and fuel consumption.
“Without this work, I am convinced that Cleveland’s future would be in doubt,” Jackson said.
Toledo made some service cuts. It laid off 75 police officers, but it later recalled more than a third of them back to work. Neither Cleveland nor Toledo have discussed future cuts.
Cincinnati seems to be in worse shape.
“No one wants to see employees laid off. Not any one of us,” Cincinnati Mayor Mark Mallory said.
Mallory and Cincinnati have, until recently, avoided layoffs. But city officials announced earlier this week it may have to lay off hundreds of employees to erase this year’s deficit. Cincinnati faces a $40 million dollar projected shortfall next year.
City manager Milton Dohoney cannot guarantee employees there won’t be more layoffs in 2010
“The floor keeps dropping out from under us. So rather than be dishonest or mislead them, we let them know that we cannot make that promise,” Dohoney said.
So why does Columbus seem to be such worse shape? Alan Proctor is a business consultant and former New York City deputy budget director. He blames an over reliance on income tax revenue, a lack of close examination of the city’s finances and annexation for the current crisis.
Proctor said annexation in Columbus pretty much ceased in the mid-1990s and the tax growth declined with it. Proctor said the once profitable annexation now drains money from the city.
“When we annexed the area that included Polaris and Easton we were able to grab anyone who worked in those areas. Now that people have kind of moved to those areas but probably work in Delaware we aren’t capturing their taxes, but we have to support where they live,” he said. Columbus City Auditor Hugh Dorian does not buy Proctor’s annexation theory. He notes more than half of the city’s income tax comes from people who do not live in Columbus.
“That that works in reverse also. If you live in a suburb but you work in Columbus you pay your tax to Columbus,” Dorian said.
Columbus Mayor Michael Coleman said the city’s problem lies in its income tax rate.
“We have the lowest income tax rate of any city, any major city, in the state of Ohio. And it’s been that way for three decades, long time. While we have continued to cut and we have cut I’m thinking approximately $600 million over the past ten years, we also have the lowest income tax rate of any of those cities on top of it,” Coleman said.
Toledo and Cincinnati have higher income tax rates. Cleveland has the same rate as Columbus.
Unlike other Ohio cities, Columbus’s population continues to grow. Auditor Hugh Dorrian.
“This population brings an increase demand for services. This is part of what brings about this need for more money. You couple the demand for services with a very, very lack luster economy in the last several years. These are the reasons we’re here where we are today,” he said.
Where they are tomorrow is up to Columbus voters.
NOTE: Ohio Public Radio station WVXU contributed to this report.