Income Tax Receipts Rebounding for Kent in 2011

Kent's income tax receipts are on the rise this year, as the first six months of 2011 saw collections increase over the first six months of 2010.

From January through June, every month saw a higher collection rate than the same month in 2010, according to Kent's budget and finance department.

And that suggests 2011 overall could finish well above the $10.4 million total collected last year.

Kent Budget and Finance Director Dave Coffee said they're even forecasting an increase for 2012 based somewhat on the construction that will be under way next year on several downtown redevelopment projects, including the , and .

"It’s interesting I guess because you can’t help but hear all that’s going on on the national level … and wondering exactly how that’s going to translate to Kent, OH," Coffee said. "But I think it’s a reasonable expectation with construction and everything that we’ve got under way, both private and public projects, that we’re going to continue to play out this year with an improved end point. How much, I don’t know."

Coffee said, so far, his conservative estimate for 2012 is a 3 percent increase overall above this year. The flip side to that, he said, is the city's expected .

"From a conservative budgeting standpoint, I’d be inclined to go with something like 3 percent, even though we might exceed that" in 2012, he said. "I’m wrestling with that very issue right now, looking at my revenue forecast for 2012."

Through June, the city has already collected almost 53 percent of its total annual income tax. Below are the figures for the first six months of this year compared with 2010.

Percent

Increase

Source: City of Kent

The news may be good, but Kent City Manager Dave Ruller remains cautious as the city prepares its budget for 2012.

"Cost cuts continue to be the predominant theme of our city budget heading into 2012," Ruller said in an email.

For the past six years, the city's departments have been forced to do more with less, both in terms of personnel and finances, Ruller said. In those six years, the city has cut $4 million in operations costs and reduced personnel by 5 percent.

"Once again, for 2012 we've asked the departments to find more cuts and to hold the line on their budgets despite the rising costs of fuel, electricity and supplies," Ruller said.

He added that the city ended 2010 with about $10 million in reserve funds, but tapping into those has always been a measure of last resort.

"If income taxes don't stay on the road to recovery and we need to rely on reserves to fill a budgetary gap, we could be facing rather dire financial circumstances in the next (two to three) years as reserve funds are exhausted," Ruller said. "It's our job through the budget process to make sure we do everything we can now to avoid that scenario by demonstrating discipline in our budgetary spending, which is exactly what we have planned for 2012."

Some mixed news in Kent's first-half income tax report is the rate of collection from employees.

Employees at the university account for about $4 million of Kent's total income tax annually. Since 2008, those income tax receipts have dropped slightly. In 2009, Kent State collections dropped more than 1 percent. In 2010, the university's income tax receipts fell by less than 1 percent.

Coffee said the leveling off at Kent State is of some concern but not unexpected.

"We knew that they were working through budget concerns of their own, and also the fact that probably reflects an austere position on their personnel," he said. "The good news of that is, with them leveling off at the 1 percent level, and we’re still above 5 percent year to date overall, that pretty much does make the point … the non-Kent State sector is where the improvement is."