On September 9, I wrote Show Me the Money about my concerns as to when we were going to see any financial benefits from all the investments Cincinnati has made in development over the past 30 years.
Two weeks later, ace reporter, Christ Wetterich of the Cincinnati Business Courier, answered my request with his piece called, Money doesn’t grow on trees? Maybe not but Cincinnati has millions more than anticipated
I am thrilled, thrilled, thrilled to agree, yes, a clearly identifiable benefit is finally showing up in city coffers. As Chris points out, “The city had forecasted that it would collect $60.5 million during July and August. Instead it has collected $64.4 million.”
Chris references a very helpful update from City Manager Harry Black issued September 24:
Income Taxes (favorable variance) are $1.5 million above the current fiscal year forecast.
Employer withholdings are ahead of last year’s collections by over 4.5%. Individual and business
payments have increased from the prior year by 7.5%. . .The tax component represents 72% of the total general fund percentage (up from 64% in 2012).
Hooray! All those construction guys working all over town really are paying income taxes and a 7.5% increase year over year is a number to celebrate.
Another interesting observation about development results included in Mr. Black’s report concerns casino revenue:
Casino Taxes (favorable variance) is up $37K. The Ohio gaming industry is oversaturated and
underperforming almost all anticipated projections. For FY2014 we took a conservative approach to our estimate, which proved to not have been conservative enough. For FY2015 we reduced the estimate by $2 million to $8.0 million.
In other words, city government finally accepted the reality that projections made during the decision-making process about the casino business were highly inflated and we got them so low that there was a $37,000 surprise to the upside. This is not really good news and should serve as a cautionary tale on future projects about economic impact reports commissioned by developers that almost always err on the side of grossly overly-rosy estimates. Be wary whenever anybody starts to tell you anything is a “goldmine” – and that even includes “safer” investments like parking garages.
Yes, Cincinnati. The increase in income taxes is genuinely good news. Unfortunately, the money is already spent. Isn’t it ironic that our ‘windfall’ will probably have to be used to help the city as it faces a $4 million judgment in a lawsuit it lost over the improper borrowing of tax-increment financing funds – an aggressive development strategy?
I repeat: Show me the money.