Dip in sales-tax receipts signals belt-tightening for Lucas County

9/3/2001

It's hard to turn on talk radio without hearing a debate about whether the economy is in a recession, a slight slump, or a correction period.

Whatever you call it, a dip in Lucas County sales-tax revenues indicates consumers are being cautious about how they spend their money.

Tax revenues, which provide just over half the county's general fund, are down 3 percent from this time last year, prompting the commissioners to ask county agencies to watch their spending for the rest of 2001.

“We're certainly not going to be receptive to new hires,” said Sandy Isenberg, president of the Lucas County board of commissioners.

“We haven't said `freeze' yet,'' Ms. Isenberg said, “but I think we'll ask our elected officials to be very frugal.”

The revenue reduction is likely to signal another tight budget for next year, said John Zeitler, director of the county's office of budget and management.

This year's budget was built on a conservative growth projection of just 1.2 percent. “We saw a trend that looked like it could be materializing at the end of 2000,” Mr. Zeitler said.

Through August, Lucas County's sales-tax revenue was at about $44.1 million.

By this time last year, the county had collected $45.5 million.

In a $131.8 million budget, that $1.4 million shortfall may not seem like a lot, but when 53 percent of the general fund is generated by sales-tax collection, it's certainly something that's noticed, Mr. Zeitler said.

“When you have over half the pie coming from sales tax and it goes down a little bit, you're going to have a big gap,” he said.

Adding to the concern is that some economists predict prediction a slower-than-normal Christmas shopping season, which would affect sales-tax collections, Mr. Zeitler said.

The county sales tax in Lucas County is 61/4 percent. Five percent goes to the state, with the rest coming back to the county.

Lucas County isn't alone in experiencing a decline in collections.

Doug Putnam, research and information manager for the County Commissioners Association of Ohio, said more than half of the state's counties are reporting that their sales-tax revenues are down from this time last year.

“I would tie it directly to economic slowdown and lack of consumer confidence,” Mr. Putnam said.

That downward trend tends to be noticed particularly in the state's biggest counties like Franklin, Hamilton, Cuyahoga, and Lucas, because the amount of money that's collected is so large, Mr. Putnam said.

Sandy Turk, Cuyahoga County's budget chief, said her office has revised the projected sales-tax receipts this year from $165.6 million down to $157.4 million.

She said sales-tax collections were down slightly through August, which is the first decline the county has seen since 1992's shaky economy.

She said she's pulling for the Cleveland Indians to make the World Series again because that created a big boost in revenue in 1995 and 1997.

“That's why we're rooting for the Indians, although we'd root for them anyway because they're our hometown team,” Ms. Turk said.

It's not just sales taxes that are dipping this year. According to the Ohio Department of Taxation, tax revenues from all sources were down $328.8 million, which is a decrease of 2.1 percent, for the last fiscal year.

Harry Barlos, a Lucas County commissioner, said all of those discouraging numbers indicate it's going to be important for the county to continue being fiscally conservative.

He said the slowdown in sales-tax collection, along with an expected 25 to 30 percent increase in health-care costs, will make the budget tighter than it's been during the relatively good economic times of the last few years.

“I guess the message to the other department heads and elected officials,” Mr. Barlos said, “is that if you see retirements in your department, make an honest effort to determine if those one or two positions can be absorbed by other sections in your department so we can get through this slow economy.”