Topic: The cost of losing the commuter tax.
Previously, the city estimated it would collect $311 million in earnings taxes for fiscal year 2022, which starts on July 1. Now, it believes it will only collect $277 million because of private sector employees who will not return to work at locations inside of the city.
UC’s Economics Center predicts a 16% to 24% drop in the city’s earnings tax revenue because of the shift. That’s a $45.5 million to $66.6 million hit to the city’s general fund budget in FY2022.
The administration also remains concerned about court challenges in Hamilton and Franklin counties to earnings taxes collected during the pandemic. A Franklin County judge recently tossed one of the challenges, but it could be revived by an appellate court. If Ohio cities and state government eventually lose those cases, the city could have to refund $137 million to $173 million.
As a result, the city is recommending $67.5 million be reserved from the American Recovery Plan Act for FY2022’s budget deficit, up from $49.5 million. The city is now set to receive $311 million from ARPA, up from $291 million.