SPRINGFIELD — A preliminary version of Springfield’s tax budget shows the city’s general fund will likely have less money to operate with in 2013, despite an increase in income tax revenue.
The tax budget, which establishes the city’s revenue for the upcoming year, will be less because of state funding cuts and the repeal of estate taxes.
The city estimates its general fund will see $36.4 million in revenues next year, down about $1 million from this year, according to the preliminary tax budget approved by city commissioners.
City Finance Director Mark Beckdahl said it’s too soon to say whether the city will need to make cuts.
“It’s very early in the process, so I don’t want to speculate on anything at this point,” Beckdahl said.
The 2012 general fund budget showed the city spent 58 percent on public safety and 12 percent on criminal justice.
Beckdahl said the city will have some flexibility because it has a carryover of $3.9 million from last year. In the next few months, city leaders will fine tune the 2013 budget, which must be submitted by Nov. 1.
The city’s income tax has increased each year over the past five years. It’s expected to collect an estimated $26.8 million in municipal income taxes in 2013, up from a projected nearly $26.7 million this year and nearly $25.7 million last year.
That’s a good sign, Beckdahl said.
“Our economy in Springfield is strengthening, and we’re seeing a bounceback in our revenue. That’s all positive and I hope that continues,” Beckdahl said.
However, the budget is down due to cuts in Local Government Funds, money the state shares with cities, counties and townships, as well as the estate tax repeal.
“We’ve known about it for a year-and-a-half,” Beckdahl said.
The city received $3.1 million in Local Government Funds in 2011, which will likely drop to $2.2 million this year.
The city is expecting those funds to be cut again, estimating it will see $1.6 million in Local Government Funds next year.
State Rep. Ross McGregor, R-Springfield, said House Bill 153, which cut funding to local governments, helped balance the state’s budget. He said drastic measures were needed to eliminate Ohio’s then-projected $8 billion deficit.
“That was one of the many difficult choices we had to make,” McGregor said.
The estate tax is being eliminated in phases. The city estimates that it will receive about $725,000 less in estate taxes next year.
The projected increase in the city’s income tax revenue will help offset the losses from the state, Beckdahl said.
“It doesn’t fully replace them, but it definitely helps,” he said.
Contact this reporter at (937) 328-0366 or Michael.Cooper@coxinc.com.