After years of uncertainty about the financial state of Metro, Cincinnati City Council today took a first step toward a new funding model for the Southwest Ohio Regional Transit Authority's bus service.
There are still plenty of dominoes left to fall, but council's vote could prime a countywide sales tax levy to fund bus service — something that most other urban counties do. It would be the first major change to Metro's funding system since the 1970s.
Council member P.G. Sittenfeld introduced the proposal that, if approved by voters, would eliminate the .3 percent of the city's earnings tax that goes toward Metro's operations — but only in the event that Hamilton County voters approved a sales tax boost of .7 percent or above for funding Metro.
Sittenfeld said the vote was the first step toward "multi-generational change" by vastly improving the region's bus system.
Metro currently gets by on $100 million a year, with roughly half of that coming from the .3 percent tax assessed on people who work in the city. Overall, the city's income tax is 2.1 percent, meaning that eliminating Metro's portion would lower the city's earnings tax to 1.8 percent. That's easily the lowest of any major city in Ohio.
But the bus system badly needs more funding. It faces a $5.8 million budget deficit this year and needs many millions of dollars in investment to become better-functioning and connect more Greater Cincinnati residents to jobs.
A plan called Reinventing Metro could substantively improve bus service if voters approve a .7 percent or higher sales tax increase. In the meantime, the bus system is in a tough spot.
Metro's precarious financial situation hasn't been helped by state funding. Ohio's state funding for public transit per capita is among the lowest in the country. Some help will likely be coming to Metro's budget via a 10.5 cent increase in the state's gas tax, however, which will generate roughly $70 million more for public transit every year. But that money will need to be divvied up among the state's 60 transit agencies.
In the past, Metro has drawn from the system's contingency fund to bridge budget gaps. Last year, SORTA's board approved using $2.8 million from that fund. This year, however, only $3.8 million remains in the reserve. That money plus $900,000 in surplus funds from last year still leave the transit agency scraping for $1.1 million to make ends meet.
Metro has until October to settle on a balanced budget, which it is required to present per state law.
Any big financial help would come after that deadline.
The charter amendment will go to city voters in next year's March primary election. Meanwhile, SORTA's board will also need to approve putting the sales tax levy — which would be anywhere from .7 to 1 percent above the county's current 7-percent sales tax — on a ballot in the spring or fall of 2020. Then county voters would need to approve that levy.
The income tax rollback is something of an olive branch for voters who may be skeptical of a tax increase — as is the potential inclusion of funds for road and bridge repair in the county tax levy ask. That could push the overall sales tax hike to as high as 1 percent.
The idea of eliminating Metro's share of the city's earnings tax has in the past sparked questions from transit advocates. Cincinnati's Better Bus Coalition, which has led successful grassroots campaigns for improving bus service, floated its own proposal to create a ballot initiative that would have raised the city's earnings tax if SORTA didn't act on a countywide levy. Even with the possibility of a county levy, BBC President Cam Hardy has expressed concerns about eliminating the city's tax entirely because it would reduce the city's presence on SORTA's board and chip away at a revenue source for Metro.
Hardy, at council today to support Sittenfeld's charter amendment. Boosters of the amendment say that they want to make sure Metro is stable financially — even if that means less city control over how it operates.
Not everyone is convinced eliminating Metro's portion of the city's earnings tax is a good idea. Councilmember Chris Seelbach voted against the charter amendment, saying he supports better funding for bus service but doesn't think the city should give up a valuable revenue source.
"I don't think it's financially prudent to give away .3 percent of our income tax knowing our financial situation," Seelbach said earlier this week, referencing the city's own budget woes. Seelbach also pointed out that the city already has among the lowest income tax rates in the state.