Dohoney: Deficit Larger, So End Rollback

Jun 23, 2010 at 4:32 pm

With the city of Cincinnati facing a $50.4 million deficit next year, the city's top administrator is recommending City Council end a property tax rollback that's been in effect since 1999. Even eliminating the rollback, however, won't prevent some cuts in city services.

The deficit estimate is considerably larger than the $30 million amount predicted by the city's budget director three weeks ago.—-

City Council is expected to make a decision on a rollback by next week, before the group recesses for a summer break. The city's tax rate must be set by mid-July, when a tentative budget — known as a “tax budget” — is due to the state.

City Manager Milton Dohoney Jr. outlined the fiscal problems confronting council in a 40-page budget document given to members June 4.

“In order to address the $50.4 million structural budget shortfall in 2011 shown in the General Fund forecast, service delivery will be impacted,” Dohoney wrote. “Revenues from the restoration of the 6.1 mill level could be used to reduce the level of service cuts in the General Fund. For instance, it could reduce the ultimate number of sworn positions that could be laid off in 2011.

“It is the administration's position that if City Council restored the property tax millage to the full 6.1 mills, then the $8.87 million generated should be used to save the jobs of approximately 110 police officers."

Cincinnati's current property tax millage is 9.82 mills, which includes 5.36 mills for debt service and 4.46 mills for the General Fund's operating budget.

The city charter authorizes a millage rate for the operating budget of up to 6.1 mills without a vote. Since 1999, however, some council members have successfully pushed to roll back the rate to offset increases in property values and keep the level of taxes paid by property owners steady from one year to the next.

Most cities and counties routinely roll back property tax rates, but Cincinnati charged the maximum rate for more than four decades until the practice was challenged by then-Councilman Phil Heimlich, a Republican.

With the rollback, the owner of a $100,000 home saves about $15 annually in taxes. Rollback opponents say the modest savings aren't significant compared with the rollback's cumulative impact on the budget.

Based on the voting records of incumbents and previous comments made in public forums, it's believed council could be split 4-4 on the rollback, with Republican Charlie Winburn providing the swing vote.

The property tax is the third-largest revenue source in the city's budget, providing 8.7 percent of the General Fund's revenue this year.

Cincinnati's 2.1 percent income tax is the largest source, providing 64.4 percent of the General Fund's revenue; revenue that the city shares with the state of Ohio — including the estate tax — is the second-largest source, providing 12 percent.

Meanwhile, Dohoney's document also makes estimates about future staffing levels of the Police and Fire Departments and how many personnel will leave due to the Deferred Retirement Option Program (DROP). Under the program, police officers and firefighters can maximize their pension benefits by sticking around until they become fully vested.

For example, as CityBeat reported in February 2009, Police Chief Thomas Streicher Jr. becomes fully vested in 2011. Shortly after Streicher appeared today on Bill Cunningham's talk show, WLW (700 AM) reported that Streicher will retire in March 2011, although the city's spokeswoman had no comment.

Dohoney estimates that the Police Department will begin 2011 with a staffing level of 1,066 sworn personnel and end the year with 1,020 if no budget cuts are made. Of the number departing, 34 would leave under DROP and 12 due to normal attrition.

The Police Department's ending number is 113 positions under the council-authorized maximum level of 1,133 sworn personnel. The amount can't fall below 946 positions in order to comply with a federal grant accepted by the city in 2009; if so, the grant must be repaid. (The grant prevented the layoffs of 50 officers.)

That means up to 74 officers potentially could be laid off to help avoid a deficit. Council, however, has generally indicated it prefers other cuts rather than laying off officers.

If no police recruit classes are held in 2012, the department would end that year with 979 sworn positions. Dohoney recommends holding one recruit class, though, to ensure the 2013 staffing level doesn't fall below the minimum required by the grant.

The Fire Department is estimated to begin 2011 with 826 sworn personnel and end the year with 778 unless federal grants are won. Of the number departing, 35 will leave under DROP and 13 due to normal attrition.

Estimated retirements under DROP will the city to make a $3.3 million lump sum payment for police departures and $1.5 million for fire departures.

Of that amount, $929,000 will be paid to Streicher upon retirement and $905,000 to Fire Chief Robert Wright when he likely retires next year.

Dohoney's document also mentions potential revenue generated by the new casino that will be built at Broadway Commons. The local casino is expected to be completed and open in 2012, but the city won't receive the full amount of a tax on gross casino revenues until all four Ohio casinos are operational.

A consultant estimates the city will receive $19.2 million in 2013 and $20.4 million in 2014.