Friday, April 27, 2001
Riverfront tax figures doubted
County officials disagree on severity of shortfall
By Dan Klepal
The Cincinnati Enquirer
Three percent yearly growth in revenues from the half-cent Hamilton County sales tax increase is no longer enough to cover the bills for the billion-dollar riverfront face lift, county officials say.
Since 1996 the county has estimated it needs the sales tax to grow at an average of 3 percent per year over the next three decades to afford new stadiums, roads and parking along the city's front porch.
But the county's latest financial analysis shows that rate of growth will leave 20 years of deficits, a total of $16.5 million that would have to be covered by money from the general fund.
Assuming sales tax receipts grow exactly 3 percent every year, the red ink will start flowing in 2005 with a $437,000 shortfall. The deficits build, slowly but consistently, through 2024, when they peak at $1.3 million.
Overruns at Paul Brown Stadium, to the tune of $51 million, along with other unexpected expenses, have added to the overall cost of redeveloping the riverfront.
County officials say the deficits are small and there is no need to worry.
Right now, yes it does require a shade over 3 percent, said the county's budget director, Suzanne Burke. But (the deficits) are fairly small amounts and there is still a lot of opportunity for fluctuations.
I don't consider that a huge concern.
Hamilton County Auditor Dusty Rhodes, who has consistently called the financing risky, said the county can't bank on the sales tax growing at 3 percent decade after decade.
They're just whistling past the graveyard, Mr. Rhodes said. They remind me of the people who were buying Internet stocks two years ago.
The county didn't get its 3 percent growth last year and almost certainly won't get it this year.
Sales tax receipts for 2001 are 2.9 percent off last year, with three of the past four months coming in an average of 7.7 percent lower than 2000. This month, the receipts rebounded with a 14 percent gain.
Last year, the receipts grew at just 1.8 percent over 1999 the first time collections from the half-penny sales tax increase grew below projections since voters approved it in 1996.
All those numbers are incorporated in the county's latest financial analysis.
Ms. Burke said sales tax receipts have historically made strong comebacks after down years.
But Tim Mara, a Cincinnati lawyer who campaigned against the sales tax increase, said the deficits should be a real concern to taxpayers. It's entirely possible for the economics to get worse, not better, he said.
Mr. Mara said the county already has had to stretch the debt out 32 years so it can afford payments on the bonds.
The further into the future you go, the less reliable the numbers are, Mr. Mara said. The taxpayers are really going to be stuck if there is an economic slowdown, Internet sales increase or any one of a million other variables kick in and go the wrong way.
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