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Springfield income taxes estimated to climb to $28M

Increased income tax revenue a sign of economic recovery, city leaders say.

The city of Springfield is expected to collect about $28.6 million in municipal income tax next year, a sign the local economy is improving, according to city officials.

If the projections hold true, the city’s income tax collections will have increased nearly 12 percent since 2011.

That shows the economy is recovering, city Finance Director Mark Beckdahl said. The city collected about $25.6 million in 2011.

“I see it and I hear it anecdotally from a number of my friends who own businesses,” Beckdahl said. “Things are better.”

Recent expansions at Heroux-Devtek, PentaFlex, Parker TruTec and other companies have led to job growth and investments in the local economy, said Horton Hobbs, vice president for economic development for the Greater Springfield Chamber of Commerce and the Community Improvement Corp.

Other Springfield employers have added jobs, including CodeBlue and Konecranes each adding about 50 jobs.

“Employers have held off as long as they can in many cases and you can start to see those investments playing out,” Hobbs said.

The level of inquiries for developments is also increasing, Hobbs said. The Prime Ohio II industrial park under construction on Ridge Road and Interstate 70 could bring up to 1,000 jobs, while the city’s Champion City Business Park on the site at the former Navistar body plant might bring another 300 to 500 jobs.

“We get a call per week inquiring about Prime Ohio II,” Hobbs said. “We didn’t get that (before). We’re moving dirt and people can actually see it. That doesn’t happen unless there is optimism in the market and the willingness to invest. We definitely see things improving.”

And recent job fair held by the chamber saw 42 companies with 250 open positions and as many as 400 job seekers.

“You don’t get that kind of turnout unless employers are hiring and growing and have needs,” Hobbs said.

The income tax will likely make up nearly 76 percent of the city’s $37.7 million general fund revenue next year.

“It’s becoming an ever-increasing share of the general fund revenues,” said Beckdahl said.

Springfield city commissioners approved the 2015 tax budget on Tuesday, which sets the amount of money the city has to spend each year and the millage for property tax collections.

“This is the first step in the budget process,” Mayor Warren Copeland said.

The estimated income tax revenue for 2015 is an increase of about 3 percent from this year, when the city budgeted about $27.7 million.

While the income tax has increased, cuts from the state mean the city won’t have more money to spend next year.

Last year, the city ran an operating deficit of $140,000. It plans to dip into its reserve funds to cover a projected $1.3 million shortfall this year.

The city’s general fund is expected to be $37.7 million in 2015, up slightly from $37.4 million this year.

Springfield will receive about $1.6 million in local government fund from the state, about half of what it received five years ago, Beckdahl said.

“Replacing all of that through income tax revenue has been difficult,” he said. “You not only have to replace the loss of that, but you also have to keep up with inflation.”

Some non-union and union employees will receive 2-percent raises later this year, the first they’ve received since 2008. At the same time the city has made changes to employee health care that increased deductibles to offset higher costs.

Other revenue sources have remained flat in areas like gas and vehicles registration taxes that go to the street funds. People are driving less, Beckdahl said, which means the city collects less money.

The city also expects to subsidize the special police levy fund by about $1.1 million.

“We’ve got some other revenue challenges in front of us,” Beckdahl said.

The total property taxes for the city in 2015 is a little more than 4 mills, which will generate about $3.1 million.

Of that, 3-mills goes to special police levy fund, raising about $2.3 million. The 0.6-mill police and fire pension levy will raise about $461,900, while the conservancy district’s 0.52-mill property tax will raise about $400,000.

The city also recently began using the Cleveland-based Central Collection Agency, which helps cities with populations less than 250,000 to use IRS records to obtain to locate residents who aren’t paying their taxes. The service led to the city collecting about $91,000.

The city’s income tax rate is 2 percent, including 1.5 percent that is permanent. In May, Springfield residents voted to continue the half-percent renewable portion for 15 years, which generates approximately $7.5 million per year.

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