Metro transit tax: Sales tax win in 2020 will open new $1M gap in city budget, manager says

Cincinnati Metro: Budget forecast 'depressing as hell,' says transit board member
Posted at 10:56 AM, Nov 14, 2019
and last updated 2019-11-14 19:47:23-05

CINCINNATI — If public transit advocates succeed next year in passing a new sales tax levy to fund Cincinnati Metro bus service, it could open a new gap in the city budget as wide as $1 million each fiscal year starting in 2021.

In an email sent the morning after Election Day, City Manager Patrick Duhaney informed Mayor John Cranley and City Council that "if a future sales tax levy does pass, the city will no longer receive the transit-designated income tax proceeds resulting in (budget) reductions."

The day prior, voters approved Issue 22: The charter amendment will roll back the city's 0.3% transit tax if county voters approve in 2020 a 0.8% sales tax increase to fund Cincinnati Metro capital and operating expenses as well as road and bridge improvements that would benefit the bus system. Voters approved the transit portion of the earnings tax in 1972, and Metro's revenue structure has not changed since.

WCPO has asked why Duhaney waited until the day after voters approved Issue 22 to bring this deficit to light and is awaiting a response from city spokesman Casey Weldon.

RELATED: Will Issue 22 momentum carry over into 2020 sales tax levy?

The bulk of Metro's current funding -- roughly $50 million out of the transit agency's $100 million annual budget -- comes from a 0.3% portion of the city's 2.1% tax on earned income. Also out of the earnings tax revenue comes approximately $1 million "for transit-related expenses including Department of Transportation and Engineering staff, Law Department staff and General Fund overhead."

"In the end, a sales tax levy for transit would be a net positive for Cincinnati, and I am confident that the subsequent budget will address these issues with minimal impact," Duhaney wrote.

Supporters of a new sales tax to fund Metro say the 0.8% increase would raise roughly $100 million annually for bus transit and another $30 million for infrastructure improvements. The specific ballot language for the sales tax proposal is still in process. The Southwest Ohio Regional Transit Authority has until 60 days before either the Ohio March primary election or the November general election to submit ballot language for approval.

Critics of the proposed sales tax hike accuse the plan of not specifying clearly enough how the revenue raised would be spent when it comes to which road and bridge projects would receive funding. Under the current proposal, an appointed board within the local district of the Ohio Public Works Commission would determine how the money raised for infrastructure improvements would be spent.

There's also the lingering streetcar "divorce" at play. Under its current management structure, the city owns the Cincinnati Bell Connector; a third-party transportation firm, Transdev, operates it, and SORTA oversees Transdev's performance on the city's behalf.

City and transit leadership alike have expressed concern that any affiliation between SORTA and the streetcar could jeopardize a sales tax levy's chances of success at the ballot box. The SORTA board's resolution stated the agency's commitment to exiting its streetcar agreement with the city by the end of 2019. Those negotiations are still in progress. That resolution also specifies that no funds raised by a new sales tax levy would go toward streetcar operations.