Issue 7 in Hamilton County: What to know about sales tax increase for transit, roads and bridges

Voters will decide on April 28
Posted at 1:09 PM, Mar 16, 2020

HAMILTON COUNTY, Ohio — Voters will decide soon whether or not to increase the county sales tax to boost local funding for public transit, roads and infrastructure improvements.

The Southwest Ohio Regional Transit Authority voted in September 2019 to draft a ballot measure that would increase the county sales tax in order to replace Cincinnati Metro's current funding model, which relies primarily on the city's earnings tax. Metro's current funding model has been in place since the early 1970s, and multiple attempts to transfer the funding burden from the city to the county have failed at the ballot in the decades since.

Here's a rundown of what voters should know about Issue 7 going into the voting booth later this month:

1. How would Issue 7 impact county taxpayers?

The plan for raising the sales tax for transportation improvements was always a two-part process, replacing Cincinnati Metro's current primary source of funding -- the city's earnings tax -- with a new portion of the county-wide sales tax.

If approved, Issue 7 would increase the county sales tax from 7% to 7.8%. This would make Hamilton County's sales taxes one of the highest in the state of Ohio. For a $100 purchase, it would mean an additional 80 cents in sales tax; for a $1,000 purchase, it would mean an additional $8 in sales tax, for a $100,000 purchase, an additional $800 in taxes, and so on.

But Issue 7 would also initiate a rollback of 0.3% of the city of Cincinnati's 2.1% earnings tax, paid by anyone who lives or works within the city limits. In November, city voters approved Issue 22, the ballot measure that set up the earnings tax rollback in the event that county voters approve Issue 7.

If voters reject Issue 7, the city earnings tax would remain at its current 2.1% rate.

2. How would Issue 7 impact Cincinnati Metro bus service?

The SORTA Board of Trustees approved putting the measure on the ballot in order to fund the transit agency's Reinventing Metro plan.

Seventy-five percent of the sales tax levy would go toward funding Cincinnati Metro bus service operations and capital costs.

Transit officials say the increased tax revenue would allow buses to arrive more frequently, to operate longer hours (24-hour service on some major routes), to provide more routes -- including new cross-county routes -- and increase rider amenities, such as newer buses and more bus stops equipped with benches and shelters. The increased tax revenue would allow SORTA to provide these increased services without increasing bus fare.

Currently, the city of Cincinnati's earnings tax generates roughly $50 million each year for bus service. Supporters say the sales tax increase would generate roughly double that.

3. How would Issue 7 impact road and bridge improvements?

The remaining 25% of the sales tax levy would be allocated toward road and bridge improvements that benefit Metro bus service. In other words, it would go toward infrastructure improvements along or within three-quarters of a mile from a fixed Cincinnati Metro routes. This could include repaving projects, road widening projects, sidewalk or crosswalk improvements for Metro passengers walking to and from their bus stops.

SORTA Board chairman Kreg Keesee estimated that this constitutes roughly two-thirds of the roads and bridges in Hamilton County.

Pete Metz, with the Cincinnati USA Regional Chamber of Commerce has helped coordinate advocacy for Issue 7 since it was announced last year. He said a study by the chamber indicates Hamilton County has roughly $2 billion in needed infrastructure improvements, about half of which would be eligible for funding through the new sales tax.

The chamber did not provide a full list of road projects the new tax could fund, but did provide some examples of the types of improvements it could fund, if passed.

Proponents say this sales tax levy would raise roughly $25-30 million a year for road and bridge improvements.

4. Would any of the sales tax revenue go toward Cincinnati's streetcar?


This was an ongoing question during early discussions of how to present a transit-related sales tax to voters.

In December, the SORTA Board unveiled the specific language voters will see on the ballot on Tuesday, which specifically prohibits any sales tax revenue from funding the Cincinnati Bell Connector:

The Southwest Ohio Regional Transit Authority (SORTA) proposes to levy a sales and use tax in the amount of eight-tenths of one percent for a period of twenty-five years. Twenty-five percent of the proceeds of the levy shall be used for public infrastructure projects, like building or maintaining roads or bridges; and seventy-five percent of the proceeds shall provide general revenues for operating the Metro transportation system. None of the levy money shall be used for the Cincinnati Streetcar. If this tax is approved, the City of Cincinnati earnings tax will be reduced by three-tenths of one percent according to the City's Charter.

Shall a sales and use tax be levied at a rate not exceeding eight tenths of one percent for a period of twenty-five years by the Southwest Ohio Regional Transit Authority (SORTA) for the purposes of public infrastructure projects, like the construction and maintenance of roads or bridges related to the provision of SORTA's service, and providing general revenues for the use of SORTA?

5. Why do supporters think the levy will pass this time?

Hamilton County voters have a long history of rejecting proposals like Issue 7.

Unlike previous attempts to raise the sales tax to fund transportation projects, Issue 7 also calls for road and bridge improvements, which advocates hope will appeal to voters who do not regularly ride Cincinnati Metro.

The proposal has also seen bipartisan support from local leaders and elected officials -- including some who have opposed such proposals in the past. Most notably, at a news conference in Westwood last month, conservatives Bill Seitz and Dusty Rhodes gave the measure their endorsements, and it was Seitz who worked to change Ohio state law to allow public transit agencies to implement a sales tax levy for road and bridge improvements.

More traditionally anti-tax folks' support might come from Issue 7's impact on the earnings tax. University of Cincinnati economics professor Dr. Michael Jones spent the last several weeks researching the economic impact of these tax rate adjustments, and he said it will make Cincinnati more competitive in attracting businesses to move to the city.

"That's going to cause a lot of new revenue to come into the city itself," Jones said in an interview with WCPO.

The PAC supporting the measure, Move Forward Hamilton County, published this list of endorsements last month, with more than 30 local organizations and nearly 40 elected officials.

6. What's the downside?

There has been little in the way of organized opposition to Issue 7, but some has been voiced on social media channels and has revolved around a few issues beyond blanket opposition to tax increases.

One of the bigger concerns revolves around how increased sales tax rates can result in less consumer spending in that county. According to Jones, projections for the amount of revenue a sales tax can raise need to take this into account.

"When proponents claim that the 0.8 sales tax will raise $130 million for public transit and infrastructure, the actual collection will be roughly $5 million less," Jones said. He based that prediction on an analysis of a recent 0.25% sales tax levy in Hamilton County, implemented in 2015, which found that levy raised about 96% of the projected funds. Jones said his conservative estimate of how much the 0.8% increase could raise is 95% of projections or higher.

Jones also called a 0.8% increase to the sales tax "unprecedented" in the state of Ohio. "There's a limit to how much Hamilton County can raise its sales tax. So if the county needs to raise more revenue, they've kind of used everything up. They've gone from 7 to 7.8 (percent). They can't go much higher."

There is also the question of who will be in charge of allocating that money. State law mandates that any road and bridge projects that get funding from the sales tax must be approved by the Hamilton County Integrating Committee, an appointed body of municipal, township and county officials. The SORTA Board itself is also an appointed body.

7. What's the timeline?

If passed, the changes to the earnings tax and sales tax would take effect July 1.

The 0.8% sales tax levy would be in effect for 25 years.