Wednesday, April 26, 2000
New study predicts city surplus
That's a switch from forecast six months ago
By Robert Anglen
The Cincinnati Enquirer
Six months after predicting a $17 million budget deficit, Cincinnati's city manager is now saying there will be a $15 million surplus in six years.
And that's the conservative estimate.
A second forecast presented Tuesday to City Council's Finance Committee projected a $50 million balance in city accounts in 2006.
The news might be positive, but it wasn't exactly welcome to council members who recently voted to cut every department budget by 2 percent in preparing for the budget crunch.
“What happened?” Councilman Charlie Winburn said. “On one hand, they gave us bad information in Novem ber. On the other hand, they give us good news now. But it leaves in question their judgment.”
City manager John Shirey said the $17 million deficit was based on a 1998 forecast by Standard and Poors DRI, which submits a new report every two years.
The new forecasts show a much stronger economy than what was predicted in 1998. Mr. Shirey pointed out two key factors for the surplus: City expenses are going down and growth in the city will increase, meaning higher revenues from income and property taxes.
The $15 million forecast was based on a 45 percent chance of a recession in the next six years. The second forecast was based on uninterrupted growth for six years.
Councilman Todd Portune said he is skeptical of the numbers, but called the forecast a helpful tool for council to determine where to concentrate resources.
“I didn't believe Shirey on the old numbers. I've been around long enough to know that forecasts usually come in wrong,” he said.
Analysts compared Cincinnati to eight other cities in various areas of population, salaries and job growth. They said Cincinnati ranked sixth for employment growth and third for annual wage growth, with an average of about $39,000. But the city's employment growth rate will lag behind the suburbs, where twice as many jobs will be created in the next decade. At the same time the city will lose 15,600 residents while the suburban population grows by 142,500.
The forecast is the first step the council will take in putting together a budget for 2000-2001. Calling it a “working document,” Mr. Shirey not ed several projects that have not yet been funded.
Among these are about $300 million for the convention center expansion, $7 million for a solid waste transfer station, $78 million in Riverfront improvements and $12 million in parks improvements.
But some council members Tuesday seemed more interested in a tax cut than a giant surplus.
“This forecast assumes property taxes will go up next year and will go up in the next two years,” said Councilman Pat DeWine.
“I think we better be cutting taxes over the next five years.”
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