City revenue streams going in different directions

By http://www.middletownjournal.com/services/staff/1317913.html - Michael D. Pitman , Staff Writer 9:23 PM Friday, February 10, 2012

    MIDDLETOWN — The financial outlook city officials have for Middletown is optimistic despite mixed results from two of the city’s largest revenue streams.
    For the second straight year, the city’s income tax collections have increased, this time up 7.3 percent. But for the sixth straight year, property tax collections have fallen. Those collections took a 9.2 percent dive from 2010, which led to a tough budgeting year for the city.
    Councilwoman Anita Scott Hill said taxes often swing back and forth, and while income tax collection is swinging in a positive direction she feels the property tax collection will soon swing that way.
    “I just think it corresponds with the way the economy is right now,” she said. “You can forecast and budget but the reality is what actually comes in.”
    According to the recently released 2011 financial report, the city received just under $4.07 million last year in property taxes, a near 30 percent drop since 2005 when the fund exceeded $5.7 million.
    The city’s income tax is up to $17.42 million from two years ago when it was just over $16.1 million said city finance Director Russ Carolus.
    The city’s 2011 budget planned for $29.8 million in general fund revenues, but it had to balance last year’s budget with about $800,000 of the city’s cash reserves. City officials hope that the cuts made for the 2012 budget will prevent the need to balance the budget with the cash reserves.
    “You don’t want to make significant cuts, but if you do you hope they’re going to be temporary,” Mayor Larry Mulligan said.
    The 2012 budgeting process started last spring, said City Manager Judy Gilleland because they knew significant cuts would come because of a reduction in state funding.
    “I have renewed hope in 2012. I’m glad 2011 is behind us. Fiscally, 2011 was a pretty tough year because of the decisions we had to make on reductions,” she said. “We have met our challenges, our economy is stable and we have seen many bright spots popping up.”
    City officials said tough choices were made in 2011, mostly to make budgeting for 2013 easier to absorb the remainder of the state’s reduction in funding.
    “The city has a number of revenue streams and when a substantial number of those revenues are cut, we have to find other areas,” said Carolus. “We have to balance our budget.”
Property tax
2011: $3.01 million
2010: $3.42 million
2009: $3.37 million
1.5 percent income tax
2011: $17.42 million2010: $17.08 million
2009: $16.1 million
0.25 percent public safety levy
2011: $2.88 million
2010: $2.79 million
2009: $2.59 million
Source: City of Middletown 
finance department

City Manager’s Weekly Briefing

February 13, 2012

 The City of Middletown was mentioned in a recent article by Landbank Expert Jim Rokakis addressing vacant and abandoned housing in Ohio. Note: The article lists Middletown vacancies at over 2,000. The 2010 census records were released this week, listing Middletown vacancies at 3,058.

“Plague of Abandoned Houses Requires a Unified Effort to Cure”

The future of every big city in Ohio -- and some not so big -- is threatened by the cancerous spread of vacant and abandoned houses. Along with public education and jobs, the destruction of neighborhoods poses the gravest threat to these cities' viability. Whatever ranks No. 4 on the problem list pales in comparison to the top three.

Cleveland of course is by far the most damaged of Ohio's large cities. Empty houses -- between 10,000 and 12,000 of them -- are destroying a once-great city from within. Some neighborhoods are almost lost. Others aren't far behind. But this is hardly a Cleveland problem. Even Middletown, a city of just 48,000 in the heart of House Speaker John Boehner's district, has, by some estimates, more than 2,000 empty houses.

Now, for the first time since the housing crisis began to wreak havoc with urban America nearly six years ago, there's a glimmer of hope. A galaxy of political talent from Ohio has coalesced behind an idea that would create federal tax credits -- and perhaps supply some tax dollars -- to fund a massive demolition program designed to save endangered neighborhoods.

At the center of that galaxy is Rep. Steve LaTourette, the Lake County Republican, member of the House Appropriations Committee and close friend of Boehner. LaTourette said he was sold on the urgent need to address this issue by former Cuyahoga County Treasurer Jim Rokakis. And he has already enlisted support from some of the House's most powerful members.

Details of the plan, which would also rely on funding from state government and philanthropy, aren't yet ready for release. But

LaTourette hopes to craft a proposal that would "fit nicely" into this year's federal tax bill. While LaTourette is key to any congressional passage of a demolition bill, he has lots of allies. They include most of Ohio's congressional delegation (Rep. Marcia Fudge will be a co-sponsor) and big-city mayors. Former Sen. George Voinovich has also volunteered to help. "The subprime disaster was like a tornado ripping through our neighborhoods," said Voinovich. "Busing did a lot of damage to our town. This is worse. We desperately need money for demolition."

There is no Plan B. If this idea fails to clear Congress, neighborhoods in Cleveland will die. The decay will spread. Flight from the city will intensify. And all of the money being spent and projects being built downtown won't matter. "This vacant property problem is choking the life out of neighborhoods in cities all over Ohio," said Rokakis, who now works for the Western Reserve Land Conservancy. "If this plan fails, we are condemning people left in these neighborhoods to a continually declining quality of life. Not a single city or town has the resources to deal with this issue at scale."

Even if Congress acts, funding a demolition program will also require financial assistance from the state. "I'm interested," said Attorney General Mike DeWine. "We would very much like to find a way to be helpful." That's a good start. But it's not enough.

During his State of the State speech last March, Gov. John Kasich went out of his way to profess his love for Cleveland, to explain how the city reminds him of his working-class roots in western Pennsylvania, to remind us that places like Cleveland and Youngstown are in his blood. In the next breath, Kasich worried about Cleveland's future, about population losses being suffered in cities throughout Ohio. "I'm here to tell you this trend must be stopped, and we're going to do it," he promised. Kasich will never have a better chance to make good on that promise than he does now. It might be his last chance.