City of Toledo sees rise in tax collection from '10

Income revenue jumps over 8%

4/22/2011

In the best sign yet that Toledo's economy is rebounding, the Bell administration announced Thursday that first-quarter income tax collections had increased more than 8 percent over the same period last year.

City Finance Director Patrick McLean told council's finance committee that the improving economy and the declining rate of joblessness had netted Toledo an increase of 8.3 percent during the first three months. So far, the city collected $22.58 million from the income tax, which is $1.73 million more than the same time last year.

"Look at our unemployment," Mr. McLean said. "It is slowly going down compared to the start of 2010 … and there are 5,500 more Toledoans working."

The city's unemployment rate was 9.7 percent in March, compared with 10.5 percent in February. It was 12.2 percent in March, 2010.

Mr. McLean said it is still too early in the year to predict whether the quarterly income tax increase would positively affect the city prediction for collections through the end of 2011 -- which is how the city mainly plans its spending for the year.

"It helps to know the number may be higher," he said. "If our income taxes are up, it's an indicator the economy is moving in the right direction."

Clarence Coleman, the city's commissioner of taxation, said the income tax increase comes chiefly from gains in the manufacturing sector.

"The numbers could get better because the withholdings are not due until 30 days after the end of the quarter," Mr. Coleman said.

The top 10 taxpayers in the city paid 4.21 percent more during the first quarter compared with the same period last year.

Councilman George Sarantou, chairman of the finance committee, said he was very pleased by the report Thursday.

"This is very good news certainly, but we are not out of the woods yet," Mr. Sarantou said. "People are returning to work -- not just at the larger companies, but also at smaller places."

He emphasized that council would continue to scrutinize spending throughout the year.

Toledo City Council on March 29 approved the city's 2011 budget. The general fund spending estimate this year totals $229.5 million.

Also in the budget, the Bell administration predicts the city will collect $147.98 million from the 2.25 percent income tax. Of that, $4 million is expected to come from delinquent income tax collections.

The city collected $144.6 million in income tax in 2010, which was $3 million more than was budgeted. That figure, however, includes $4.08 million from collecting delinquent income taxes.

Even with the income tax increase, the city's general fund was far from healthy this year, city officials warned.

Mayor Mike Bell's final strategy to balance the 2011 budget included allowing the city's garbage collection to be taken over by a private company beginning Sept. 1 to save 2.8 million in spending this year, transferring $6,775,000 from the capital improvements fund into the general fund, selling $600,000 worth of landfill space, and selling $4.85 million in other properties and assets.

As a result of using the capital improvement funding for general fund expenses like police and fire salaries, the Bell administration said it does not plan to do residential street repaving this year.

Mr. McLean reported Thursday that general fund expenses during the first quarter were slightly higher than the budget allows.

The main culprit is overtime in the fire department, which has already burned through 73.1 percent of its overtime budget for the year. Of the $2.52 million spent during the first quarter, $1.6 million was a one-time payment of deferred overtime from last year, Mr. McLean said.

Contact Ignazio Messina at: imessina@theblade.com or 419-724-6171.