CINCINNATI -- There’s good news and bad news for Hamilton County taxpayers.
The good news: A proposed General Fund budget for 2014 doesn’t include any new tax increases.
The bad news: As a way to wean the county off its dependence on property taxes, administrators are suggesting raising the sales tax at some point in the future.
Hamilton County commissioners were given the recommended budget at their staff meeting Monday morning.
The proposed spending plan estimates next year’s expenses at $204 million, an increase from $195 million in 2013.
Still, the budget doesn’t include any tax increases, significant cuts or employee layoffs after six consecutive years of reductions.
Tax revenues are up, a sign the economy is slowly beginning to bounce back from the Great Recession in 2008, county officials said.
“It means we’re on the road to recovery from a tough recession,” said Commissioner Greg Hartmann.
Of the $15.4 million increase in proposed spending, $2.1 million comes from higher than estimated revenues in sources such as sales tax, property taxes and real estate market activity.
Of the remainder, the largest portion -- $6.65 million – goes toward security details in the Hamilton County Sheriff’s Office related to medical care of inmates.
The money will come from the county’s Indigent Care Levy funding, and reverts to a policy used prior to 2012. The levy generates about $81.5 million annually for area hospitals to provide care to poor people.
Also, other funding increases planned for 2014 include $3.27 million for the Clerk of Court’s Office. Some of the increase is due to increased efficiency, while the rest is due to fee increases approved by Municipal Court judges.
Still, County Administrator Christian Sigman warned commissioners against being overly optimistic about the improving economic outlook.
“With projected revenue growth anticipated to be at best slow and modest, the budget staff has approached the recent upticks in sales and transfer taxes cautiously until it becomes clear that they are sustainable, and not temporary bubbles,” Sigman wrote in a report.
Sigman proposes raising Hamilton County’s sales tax from 6.75 percent to 7 percent in coming years, to help pay for improvements to services and facilities.
Currently, Hamilton County’s nine property tax levies and the inside millage generate $263.2 million in revenue annually.
The amount represents about about 19 percent of the property tax burden on the typical county resident, which also includes property taxes for cities, school districts and townships.
But Sigman describes the reliance on property taxes as “the most divisive revenue source for local government.”
To make Hamilton County more competitive with rural counties in attracting new jobs and residents, Sigman recommends shifting some of the tax burden from property taxes to the sales tax.
A quarter-cent sales tax hike would generate about $34 million annually, part of which would be used to provide $10 million in property tax relief. That equates to a savings of $15.42 for every $100,000 in assessed value.
The county’s current 6.75 percent sales tax rate is lower than the rate in 65 of Ohio’s 88 counties.
Critics of sales tax hikes generally say they are regressive, and place more of the tax burden on low-income people while primarily benefitting wealthier people and large commercial property owners.
If commissioners were to OK a sales tax hike, Sigman wants to use the revenue to converting the Mercy Health Mount Airy Hospital into an upgraded lab for the county coroner.
Also, 100 jail beds would be added to the site. Hamilton County voters have twice rejected sales tax increases at the polls, in 2006 and 2007, which would’ve funded building a new jail.
Further, Sigman wants to use the latest sales tax increase proposal to lower or eliminate county building fees.
“Hamilton County requires a ‘game changer’ – a program which levels the playing field or, better, tilts the field in favor of Hamilton County as a premier community in which to live, work, invest and play,” Sigman wrote.
The sales tax could either be increased via approval by two of the three county commissioners, or approval by voters at the polls.
Commissioners, however, are wary about the idea.
“This is the county administration’s recommendations, not the board’s,” said Commission President Chris Monzel. “For the record, I don’t support any sales tax increases.”
“I don’t criticize you for choosing the sales tax over the property tax,” Hartmann told Sigman, but added he is “not ready to commit” to an increase.
Commissioner Todd Portune said, “I don’t think increasing taxes to raise revenues is something we should be looking at right out of the gate.”
The 2014 proposed budget includes funding for four agencies that
promote economic development: $700,000 for the Port Authority; $653,000 for the Hamilton County Development Co.; $135,000 for the Chamber of Commerce; and $111,310 for the OKI Regional Council of Governments.
County officials have scheduled three public hearings on the proposed budget.
The hearings are at 6:30 p.m. Oct. 15 at the Green Township Administrative Building; 11 a.m. Oct. 23 at the county building on East Court Street in downtown Cincinnati; and 6:30 p.m. Oct. 24 at Montogomery City Hall.
Although county commissioners have until Dec. 31 to approve a spending plan, they anticipate voting on a final document sometime in November.