Thursday, February 15, 2001

Stadium tax revenue slowing

If trend continues, paying for riverfront is in danger

By Dan Klepal
The Cincinnati Enquirer

        The countywide sales tax being used to pay for riverfront stadiums and parking grew last year at only about half the rate Hamilton County officials need to pay the bills.

        And the sales tax is projected to grow less than needed this year, as well.

        County officials need sales tax revenues to increase at an average of 3 percent every year for the next three decades in order to pay off nearly $1 billion in new construction along the riverfront.

        Last year, the sales tax grew at just 1.8 percent, the first time collections from the half-penny sales tax grew below projections since voters approved it in 1996.

        There's a lot riding on the numbers — and even the smallest change in the rate of growth could have serious consequences in the coming years.

        The county starts paying off the debt for Great American Ball Park in 2003. If the sales tax grows at an average of only 2 percent per year, county officials will be looking at a $1.6 million shortfall in 2005, a $2.2 million deficit in 2006 and a $2.7 million hole in 2007.

        It will be a close shave in those years even if the sales tax grows at 3 percent — there will be a surplus of only $179,000 in 2005, $143,000 in 2006, and $186,000 in 2007.

        Hamilton County Auditor Dusty Rhodes said that with untaxed Internet sales becoming more popular and an uncertain economic outlook, the county could find itself in a position to renege on the property tax rollback that was part of the deal to raise the sales tax.

        “If you're down or don't quite make it one year, the next year you have to make even more to get even,” Mr. Rhodes said. “So the more they fall back in early years, the more they've got to make up.

        “The ability to do that then becomes questionable.”

        Sales tax revenues fell 5.9 percent in January this year compared to January 2000. The projection is for the sales tax to grow 2.3 percent this year.

        The half-cent sales tax took in $52.8 million in 1997, the first full year it was collected. Revenues jumped 5 percent in 1998 to $55.4 million. Collections increased 7.4 percent in 1999 to $59.5 million.

        Suzanne Burke, the county's budget director, said history is on the side of the sales tax making a strong comeback.

        Since 1970, the sales tax has grown at less than 3 percent only four times. Each time, the tax has rebounded the next year with growth of more than 5 percent.

        “We know this happens occasionally,” Ms. Burke said. “But we haven't based our financing (plan) on what happens in any one year. It's based on our history, which is 7 percent growth (over a span equal to) the life of the sales tax.”

        Hamilton County Commissioner Todd Portune said he's not willing to back off on any promises to reduce property taxes.

        But he said the amount of money being spent along the riverfront has to be scaled back. He wants the Bengals lease renegoti ated and he wants to try to get the state to pay the full 15 percent of stadium costs. The state had originaly promised to pay 15 percent of total costs for the two new stadiums, but later agreed to pay $80 million instead.

        “The numbers are real and the community needs to wake up to the fact that the numbers are real,” Mr. Portune said.


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