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Published: Friday, 4/30/2010

Tax revenue for city down 8%

BY IGNAZIO MESSINA
BLADE STAFF WRITER

At a time when some believe the economy may be rebounding, Toledo collected nearly 8 percent less from its payroll tax during the first three months of 2010 over the same period last year.

Through March 31, the 2.25 percent income tax generated $20.84 million, compared to the $22.63 million for the first three months of 2009, and $25.77 million the first three months of 2008, the Bell administration said yesterday.

City Finance Director Patrick McLean said the first-quarter collection total, which could still be increased by late payments, was not unexpected.

"Our projections for revenue were that it would be slightly less than last year," Mr. McLean said.

When Toledo City Council on March 30 approved its 2010 spending plan, it assumed$138.1 million from income taxes.

Council increased the expected income tax receipts by $2 million over what the Bell administration had originally proposed.

Councilman George Sarantou, head of council's finance committee, proposed the increased assumption.

Mr. Sarantou said it's too early in the year to say if the city will hit that $138.1 million mark.

City Finance Director Patrick McLean said revenue projections from income taxes were slightly less than last year. City Finance Director Patrick McLean said revenue projections from income taxes were slightly less than last year.
NOT BLADE PHOTO Enlarge

There has been a steady decline in Toledo's income tax collections, which is the chief reason for budget problems that have snowballed since 2007. Total income tax collections for 2009 were $141.5 million; 2008 were $154.4 million, and collections for 2007 were $169.7 million.

"I think we are making slow but steady progress," Mr. Sarantou said. "There seems to be more optimism now - not the amount that there is in other states, but there is optimism."

Additionally, Mr. Sarantou said the city typically collects its largest amount from the payroll tax in the second half of the year.

"What we see really is third quarter is when we will see a bigger growth factor," he said.

The city is expecting jobs at Chrysler Group LLC's Jeep assembly plant and General Motor Co.'s Powertrain plant to help.

"They are planning to recall people who were laid off and that helps us," Mr. Sarantou said. "They will also have an ancillary effect on other businesses, like suppliers and even small businesses like restaurants and retail stores around those plants."

Councilman D. Michael Collins on March 30 wanted to go even higher and assume $142 million from the income tax this year, which would have helped the city balance its general fund budget without other so-called revenue enhancements like a higher monthly trash fee for Toledoans.

University of Toledo professors David Black and Oleg Smirnov early this year predicted a range of just $135.2 million to a low of $129 million for 2010 income tax collections.

Back in November, 2009, then-Mayor Carty Finkbeiner had a more rosy outlook for 2010 and proposed an annual budget that assumed the city would collect more than $147.17 million from income taxes this year.

After months of debate, a series of public hearings, and gathering input from city and regional officials, Mr. Bell devised a plan released on March 1 to balance a $48 million deficit his administration predicted for 2010. That figure included a deficit of $8.45 million carried over from last year.

The budget plan approved by council included all the major components Mr. Bell offered and the assumption for income taxes. If it falls short, the city could end up in the red late this year.

Mr. Bell said he is hopeful the economies of the nation and the city will increase throughout the year. The mayor referred to a survey of 46 economists by USA Today who said that the nation's recovery would be stronger than expected and there could be a growth of 3 percent this year, up from forecasts of 2.8 percent in January.

"I can hope that in this area, that projection occurs and maybe is better," Mr. Bell said.

Lucas County's sales tax receipts for the month of April were down 6.31 percent from a year ago, or $309,493.89, according to budget director John Zeitler.

But the year-to-date number is only 0.01 percent below the 2009 receipts for the same period.

Staff writer Carl Ryan contributed to this report.

Contact Ignazio Messina at:

imessina@theblade.com

or 419-724-6171.



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