The two University of Toledo professors who correctly predicted a nosedive in income tax collections for the city have once again lowered their estimates for 2009 municipal revenues and are warning officials to brace for an even bleaker 2010.
Professors David Black and Oleg Smirnov, who were hired by Toledo City Council to forecast income tax collections, now say the city will end 2009 with $140 million to $138.4 million - which would deepen the deficit the city will carry over to 2010.
Although the city takes in money from other sources, Toledo's general fund is chiefly supported by the income tax.
The Finkbeiner administration's original 2009 spending plan expected nearly $169.7 million in revenue from Toledo's 2.25 percent payroll tax, but by February, officials realized the number would be closer to $145 million after Mr. Black and Mr. Smirnov issued a report.
The proposed 2010 budget from the Finkbeiner administration, which was released last month, assumes the city will collect more than $147.17 million from income taxes.
But the new 2010 forecast from Mr. Black and Mr. Smirnov predicts a range of just $135.2 million to a low of $129 million.
The report also holds no hope that Toledo's economy will rebound next year.
"The outlook for 2010 is continued high unemployment," Mr. Black and Mr. Smirnov wrote. "Many don't expect unemployment to fall substantially until late 2010. … This assessment is due to a continued weak job market, cautious consumers, and continued tight credit."
Toledo officials, who are still grappling with ending 2009 in the red and facing tough choices to balance the books before the end of 2010, were disappointed yesterday with the lower revenue predictions.
"It's very sobering," said Councilman George Sarantou, chairman of council's finance committee.
"They have adjusted their numbers during the year and clearly, based on what they are using, it's unfortunate news," he said. "A lot is automobile-related and I'm disappointed, as I am sure everyone is."
Mr. Sarantou said he would rather the numbers be on the conservative side than for the city to approach the end of 2010 with a huge unexpected shortfall.
Councilman D. Michael Collins said Mayor-elect Mike Bell should adjust the 2010 spending plan immediately after taking office.
"He should not do what the Finkbeiner administration did, which is wait until halfway through the year," Mr. Collins said.
City Finance Director John Sherburne said the latest report is indicative of a continuing slide in the local economy.
"The question is at what level will it continue to decline," Mr. Sherburne said. "If you [have] seen our income numbers, they are not going up or stabilizing from next year. You look at the numbers and we are not doing as well as we did last year, and last year was a bad year."
The city's financial outlook has looked worse since the Finkbeiner administration released the 2010 spending plan on Nov. 16.
Mayor Carty Finkbeiner said early last week that the 2010 deficit will approach $40 million - $10 million more than the $30 million projected in November.
In his last proposed budget, Mayor Finkbeiner urged council and Mr. Bell to raise the monthly trash collection fee to $16, eliminate the tax credit for Toledoans who work outside the city, and consider seeking voter approval to raise the income tax from 2.25 percent to 2.5 percent.
Last week, the incoming mayor named the first 11 people to his promised "Citizens Special Investigation" task force, which includes bankers, city union leaders, business representatives, a councilman, and two retired city administrators.
The team will analyze income and expenses, pension and benefit liabilities, and overtime costs.
Contact Ignazio Messina at:
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