It’s getting more difficult for Strongsville to balance its budget.
As the overall cost of doing business continues to increase, it’s putting more of a strain on the city’s general operating fund.
In 2008, 75 percent of the city’s general fund operating budget came from income tax revenues. Next year, finance director Joseph Dubovec expects that number will grow to 85 percent.
“Reliance on income taxes is increasing, and we’re going to have to find new revenue sources to be able keep up with the increases in expenses,” he said. “It’s getting difficult.”
Fortunately, the city’s income tax collections bobbed during the recession and are starting to grow.
Total city income tax revenues were about
- $23 million in 2007,
- $23.3 million in 2008,
- $22.2 million in 2009,
- $22.2 million in 2010 and
- $23.7 in 2011.
The city also keeps $7 million to 7.5 million in general fund balance reserves.
“It looks rosy when you just look at income tax for the city of Strongsville,” Dubovec said. “That’s great, and I’m appreciative of that because it makes my job a little easier. But on the flip side, if you look at the increases, people want raises, health care is going up. It’s another thing we have to deal with as we move forward.”
As of June, the city has had collected just over $13 million in income taxes. That’s an increase of 1.48 percent, or about $283,000, compared to last year. Those numbers will change with more collections, but Dubovec is slightly concerned as revenues have been down the past two months. He isn’t sure why and hopes to have more data for further study in another month.
“Looking at this year, I know I’m going to be eating some of my fund balance because of the loss of revenue, and it’s still early in the year. It’s something that I look at every day, and I’m not lying,” he said laughing. “I look at the cash numbers from (Regional Income Tax Agency), what their expenses are daily and try to be on top of things.”
Still, Dubovec is optimistic the numbers will improve and the city will finish the year as budgeted.
Strongsville’s business base has expanded over the last four years through existing company expansion and relocations — good news for a city where employee withholding accounted for 63 percent of total income tax collections.
“We’ve been thrilled as always with our business base, said Brent Painter, director of economic development. “We really need a strong business base to supply the services that we can to the public. We’re really blessed because not only do we have a strong business base, we have a very diverse business base.”
Painter said no single business accounts for more than 5 percent of the income tax base, and the large companies are in different industries. In other words, the city is diverse enough that it won’t be devastated by a major change in one industry such as automobiles.
Much of the city’s growth has come from the manufacturing sector. Painter closely watches national manufacturing indexes like the Institute for Supply Management.
“In June, it fell below 50 for the first time in three years, which means nationally the manufacturing base is shrinking. It’s no longer growing through the recession,” he said. “We’re very cautious here because we have to make sure that we’re watching the national trends here as well. Hopefully, our businesses here won’t be too affected by it.”
One national trend Painter didn’t see locally was a slowdown in retail. Although retail usually doesn't have full-time jobs, so they don’t contribute to income tax collections as much as manufacturing, they are an attractive convenience.
“They provide a great service to our residents here as well as they’re good amenities when we try to bring in companies,” Painter said. “To be able to go right down the street to do your shopping or have your oil changed or whatever the case might be, it’s a great thing to have those resources here in town.”
In addition, much of the higher-than-normal business park vacancies in 2008-2009 have been filled, except industrial land purchases. That’s largely because there were a number of vacant industrial buildings, which are cheaper to repurpose. Once those buildings fill and companies look to build, Painter said Strongsville will benefit.
The city has 169 acres of industrial zoned land next to to an additional 300-plus acres of greenfield, the largest parcel of undeveloped land in Cuyahoga County.
“A major initiative moving forward (is) to develop that properly in the future as a technology park,” Painter said. “As more buildings get bought, people are going to start building new again and the city is going to be in a good position to capitalize on that.”
Editor’s Note: In this series, Patch gauges the recovery of 18 Ohio communities based on income tax receipts since the Great Recession. Read about