About 78 percent of the city of Springfield’s general fund revenue is made up of income tax money — an increase of about 13 percent over the past 10 years as state funding has been cut.
The city of Springfield is projected to collect about $38.1 million in general fund revenue next year, less than it operated with before a recession hit 10 years ago.
The 2017 tax budget, which establishes the city’s revenue for the upcoming year, was approved by city commissioners at its June 21 meeting.
Springfield is projected to collect about $29.7 million in income tax money for the general fund.
In 2007, the income tax made up about 65 percent of the overall general fund. The percentage has increased each year since 2011.
“It really gives a stark picture of how dependent we are on income tax revenues for the health of our general fund,” Springfield Finance Director Mark Beckdahl said.
The city is also expected to receive about $1.7 million in local government funds from the state.
“That’s a major change from years ago when we got as much as $5.4 million from the local government fund,” Beckdahl said.
The income tax is becoming a bigger share of the total revenue because of the loss of state funding, including cuts to the local government fund and the elimination of the estate tax, Beckdahl said.
“Our revenue has been growing, but it has not grown enough to fill in for those state revenues that we used to receive,” Beckdahl said.
The city collected about $36.6 million total in 2014 and about $36.6 million in 2015 for its general fund. It’s expected to collect $37.4 million this year.
In 2007, the city collected $39.8 million in total for its general fund revenue, Beckdahl said.
“We’ve come back from the recession, but only to the point where we’re just now getting anywhere close to what we were,” Beckdahl said.
Springfield is also projected to have about $3.4 million in income tax money for capital projects.
Earlier this year, a citizen-led advisory group analyzed the city’s budget, which faces a projected $930,000 deficit. The panel of business leaders and residents made several recommendations to commissioners in an eight-page report released last month, including increasing the income tax rate from 2 percent to 2.4 percent for five years to generate an additional $6.6 million per year.
The committee also said the city should complete an in-depth study of its expenses and possible cuts if it hopes to pass a tax increase in November.
Last week, the city and the Chamber of Greater Springfield agreed to pay $125,000 for an independent analysis of Springfield’s finances. It’s expected to be completed in September.
Other cities are struggling financially due to state cuts, Copeland said.
“All of them are trying to figure out what services to cut or whether their people are willing to provide more revenue,” Copeland said. “We’re all in the same boat, sadly. I don’t know if it makes it any better to know other people are suffering, too, or not, but it’s reality.”
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