Toledo's economy has improved slightly, yielding extra income tax revenue for the city treasury this year, a University of Toledo economist told City Council's finance committee yesterday.
However, Dr. Paul Kozlowski said the recovery from the 2001 recession is occurring slowly.
Dr. Kozlowski projected the city's income tax revenue will be $157.35 million in calendar year 2003, an increase of $206,761 from the projection he made in December of $157.14 million. Overall, Dr. Kozlowski said city income tax revenue in 2003 should be at least 2.2 percent higher than the $153.96 million collected in 2002.
The 2001 recession forced the city to pass bare-bones budgets two years in a row. Dr. Kozlowski said the recession hasn't produced an uptick in employment yet, just more production.
“This is a jobless recovery so far,” he said.
He said the economy is improving because fear of terrorism and war in Iraq have abated. “The threat of terrorism has not diminished, but the war has consumers showing more confidence. The war is over, and it was successful,” Dr. Kozlowski said. “In April, consumer confidence went up. We're still waiting for business confidence to increase.”
Council President Louis Escobar questioned whether the threats have passed, saying the war in Iraq might actually have boosted the chances of another attack like that of Sept. 11, 2001, and he noted the still unknown fates of Osama bin Laden and Saddam Hussein.
“I'd feel a lot better if the two of them were definitely out of the picture,” Mr. Escobar said. He said he hopes council isn't planning ways to spend the projected extra tax revenue.
Dr. Kozlowski, a professor of finance and business with the Urban Affairs Center at the University of Toledo, advises City Council on its budget. The 2.25-percent income tax is Toledo's major source of revenue, and is highly dependent on the economy.
City Finance Director John Bibish also spoke to the committee and said he is projecting Toledo will spend about $210,351 less over the course of 2003 on payroll than what was budgeted in March.
Mr. Bibish said the trend is positive, but called the amount of money, compared with the city's $224.7 million general operating fund budget, “a pittance.”
Dr. Kozlowski said Toledo is rebounding from the 2001 recession more slowly than it did in the 1991 downturn.
In 1991, city income tax revenues dipped 2.9 percent from the year before, and then rebounded 10.3 percent in 1992 and 1993. In 2001, income tax revenues fell by 1.9 percent, but are expected to recover by only 4.2 percent in 2002 and 2003.
He said the recession has cost the city treasury about $18 million in tax revenue.