Futures Commission wants more than $500M in fees and taxes. Who will pay?
The Cincinnati Futures Commission has pitched more than $500 million in additional taxes and fees to shore up the city's finances and boost regional economic development. Who pays what?
The panel suggested a raft of proposals to raise $728.1 million over 10 years to fix the city's budget and grow the population. Besides higher taxes and fees, they get to that amount via $80 million in cost cuts and selling off as much as $75 million in assets, including Lunken Airport, six golf courses, parking lots and land. Other proposals include solving the city's pension woes by spinning off Greater Cincinnati Water Works.
The commission didn't provide any estimate of the impact to the average resident or taxpayer. But an Enquirer analysis of the initial impact of the garbage fees and increased earnings tax suggests the costs could start at nearly $300 per household.
Here's a breakdown of where the money comes from and who pays.
'New revenue' means $500 million in higher taxes and fees
So which of the proposed changes will generate the most for the city's spending plans? It's not entirely clear. Water bills, which have already been rising, could climb further if the city spins off the utility, but it's uncertain by how much.
Other recommendations, however, included specific costs or provided rates for fees and taxes:
$357 million from an 8.3% increase in earnings tax levied on anyone working or living in the city, which would rise from 1.8% to 1.95%. The tax was previously as high as 2.1% but was reduced to 1.8% after Hamilton County increased its sales tax to pay for Metro bus system. That suggests an extra $88 a year for the median worker in the region, making about $58,000 a year and already paying more than $1,000.
$164 million from a new $15.30 per month per household (about $184 a year) fee for trash collection. The plan calls for a $7.60 monthly fee for some lower-income households.
$11.7 million from better enforcement of the 3% tax on the resale of events tickets by platforms such as Ticketmaster, SeatGeek and StubHub.
$10 million from an expansion of parking and meters − and tickets. Currently, the city generates about $3.6 million from parking each year. The panel's projection suggests these revenues can increase more than 30% over the course of the next decade. The plan does not call for increasing the cost of parking tickets but includes "increase parking enforcement" − so writing more parking tickets. Parking tickets in Cincinnati start at $45 per infraction but can go as high as $250. Finally, the group also recommended adding "additional metered parking" to growing parts of the city.
Water works: Higher bills to get the city's budget out of hot water
One of the biggest problems the Futures Commission tackled was the city's underfunded pension plan that threatens to suck cash away from city jobs and basic services. To fully fund its pension obligations, the city needs to contribute $60 million each year until 2045 (it paid about $42 million in the current fiscal year), which the panel said "would cause significant strain" on the city budget.
The solution, the panel said is to get the state's largest pension fund, Ohio Public Employees Retirement System, or OPERS, to take it over. The trick, however, is the city would likely have to pony up $390 million or more to plug holes in the pension to persuade OPERS to assume control.
The only asset the city could use to raise the kind of money needed is the city-owned water company, Greater Cincinnati Water Works. The panel recommends spinning off the company into a public authority, a quasi-public-private entity, like the Port of Greater Cincinnati Development Authority or the Cincinnati/Northern Kentucky International Airport.
The panel noted the city's water works is valued at about $680 million and spinning it off would yield the city a one-time windfall to help with its pension woes.
What effect would all this have on customers' water bills? The panel doesn't know exactly. They note water bills are already on the rise and could likely increase amid such a transaction.
"Consumer water rates may increase in the short term to accommodate the asset transfer," the panel wrote in its report.
'Optimization' and 'savings' to cut parks, recreation and public safety costs
The panel also outlined plans to squeeze nearly $100 million out of city operations:
$35.6 million from public safety after the city conducts "efficiency studies" recommended by the panel. The commission is trying to hold increases in public safety spending to 2.7% and wants to dedicate one-third of the extra earnings taxes to police and fire. Still, the city needs to find ways to save money and the panel noted there hasn't been a detailed study of spending for more than a decade: "A detailed study of each department will yield at least $17.6 million in savings over 10 years, while still allowing for a modest rate of growth in the department," the commission wrote.
$34.5 million from the proposal for parks and recreation departments to "work together toward an optimized operational vision." By charter, Cincinnati's parks and rec departments are separate and the commission said that creates "inefficiencies." The panel stopped short of recommending changing the city's charter but encouraged the city to explore ways the two departments could use "shared services" to save money.
$10 million from "gainsharing." The panel suggests hitting up city employees for tips on how to save money, perhaps even incentivizing them to do so. Several of the panel members, such as chair Jon Moeller, work at large companies that embrace concepts like "lean manufacturing," which advocates workers making suggestions to save time and money. Specifically, the panel recommended launching a pilot program within the city's fleet (vehicle and equipment) services, noting a similar program in Baltimore was successful.
$5.8 million from savings on maintenance and utilities thanks to the pending sale of the Cincinnati Southern Railway, which the commission recommends be channeled back into the city's operating budget.
$100 million worth of other ideas: including selling golf courses, parking lots and leasing Lunken
Among its other suggestions, the panel said $65 million of the earnings tax money dedicated to capital projects should be moved back into the operating budget. The panel said investment proceeds from the sale of the Cincinnati Southern Railway should cover enough infrastructure expenses to free up earnings cash to be used elsewhere.
The panel also recommended selling off or leasing several city assets that it estimated could generate between $22.6 million to $75.1 million:
$6.5 million to $27.3 million for the sale or lease of its six golf courses. The panel recommends considering either selling them to a private golf operator or selling them to developers for non-golf use.
$8 million to $27 million for the leasing of Lunken Airport. The panel suggests negotiating with CVG airport to take over operations.
$6.2 million to $14 million for three city parking lots in Downtown.
$1.9 million to $6.8 million for city-owned land. The panel noted the city owns "a number of parcels" that the city could consider selling off. It only cited two properties specifically as examples, the health department headquarters in Corryville as well as property in Roselawn.
This article originally appeared on Cincinnati Enquirer: How the Cincinnati Futures Commission plan would raise taxes, fees
