Why Aren't Ohio's City Budgets Collapsing Under COVID-19? – msnNOW





© Provided by Patch


From the Ohio Capital Journal:

By

Rob Moore

Loading...

Load Error

In March of this year, the Brookings Institution had a blog post that pegged four Ohio cities — Columbus, Cincinnati, Toledo, and Cleveland — in the top five “cities with the most immediate fiscal impacts from COVID-19” in the entire country.

Yet this gloom and doom about Ohio fiscal prospects did not materialize. Columbus cut its budget by 4.1% last month to accommodate for decreased funds. Cincinnati actually ended its fiscal year with $20 million more than expected. The mayor of Toledo came out early on saying that initial cuts would be less than 4% of the operating budget passed in March. As of June, the city of Cleveland was down only $4.5 million of its $1.84 billion budget, about 0.2% of the total budget.

These hits will still hurt. These adjustments represent millions of dollars in lost revenue that will mean reduced city services for residents. But it’s worth noticing that a Brookings report from two weeks ago said that total national state and local revenues will decline by 5.5% in 2020, meaning all four Ohio cities Brookings pegged in March as having monumental budget holes in the near future are today beating the national average.

How did this happen? Well, during a “normal” recession, unemployment goes up and people pull from their savings to spend money. You have a (relatively) slow ramp-up in joblessness and people shift their spending around to accommodate job conditions. Because of this, property taxes generally stay pretty steady, sales taxes have a slight shock due to people tightening their belts as they lose money, and income taxes are hit heavily due to the shock in unemployment. It’s easier to keep spending on credit than it is to find new work when you lose your job, so sales stay steady compared to income.

Ohio is different than most states in the ability it gives its cities to raise income tax, and its cities have used this ability to become especially dependent on income tax. So in a regular recession, Ohio cities would be most threatened fiscally since their cash cow — income — is most in danger.

The 2020 recession, like everything else this year, was different. All at once, the state shut down large portions of the economy in the form of service, travel, retail, and hospitality. While this happened, the federal government stepped in and provided enough support to prop up household incomes in the form of unemployment payments and cash support. But households didn’t spend these dollars in stores because stores weren’t open. American saved a record one out of every three of their of dollars in April, meaning that income stayed afloat while sales fell.

So Ohio cities are doing better now than people expected them to, largely because of the unique character of this recession. In the next couple years, though, Ohio might not be so lucky. While 2022 total revenues are projected to be down 4.7% compared to 2020’s 5.5%, the income tax situation is expected to get worse, declining by 4.7% in 2020 and falling by 7.7% by 2022. Ohio’s best hope is that these projections are off, too, otherwise the cities of the state have a long two years ahead of them.

THE MORNING NEWSLETTER

Subscribe now.

This story was originally published by the Ohio Capital Journal. For more stories from the Ohio Capital Journal, visit OhioCapitalJournal.com.

Continue Reading

Related Posts

Comments

  1. 58744 211589the most common table lamp these days nonetheless use incandescent lamp but some of them use compact fluorescent lamps which are cool to touch.. 167337

  2. 907332 438010Hey. Quite nice web web site!! Man .. Excellent .. Fantastic .. Ill bookmark this internet internet site and take the feeds alsoI am pleased to locate so a lot useful data here within the write-up. Thanks for sharing 501922

  3. 961346 908689Finally, got what I was seeking for!! Ive actually enjoying every small bit of this. Ecstatic I stumbled into this post! and also Ive bookmarked to look at special information for your weblog post. 407281

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

21,935FansLike
2,507FollowersFollow
0SubscribersSubscribe

Recent Stories

Trois budgets pour ODW – CB News

Le 27 janvier 2022 à 20:16 ...

Household budgets face a good belt tightening as rising interest rates push up mortgage payments – Interest.co.nz

Many households will be in for an unpleasant economic shock over the next couple of years as the low interest rate party comes to...

Grand Valley Public Library budgets $329,702 for 2022 – Orangeville Banner

Grand Valley Public Library budgets $329,702 for 2022  Orangeville Ban

Smaller weddings, tighter budgets derail Kanchipuram's silk industry, eyes now on Budget 2022 – CNBCTV18

There's a noticeable absence of bustle on Kanchipuram's Gandhi Road, home to the town's famous Kanjeevaram silk houses. It doesn't matter that it's the...