Wednesday, June 06, 2001

Pinch looms for city employees

By Howard Wilkinson
The Cincinnati Enquirer

        Many of the city of Cincinnati's nearly 7,000 employees might end up bearing the burden of the city's shrinking revenue base, City Manager John Shirey told a council committee Tuesday.

        A slow economy has meant slow revenues, Mr. Shirey told council's finance committee Tuesday afternoon, and that could mean a $25 million shortfall in what the city had expected to collect through 2002.

        The city is set to spend about $41 million this year on health-care coverage for its workers. The insurance carrier, Mr. Shirey said, has already told city officials to expect cost increases of 14 percent this year and next.

        “The news is not good,” Mr. Shirey said, telling council that collections of the city income tax — a major source of general operating funds — is 2.3 percent below projections so far this year.

        Mr. Shirey said that as employee unions negotiate new contracts, they can expect the city to ask that employees pick up more of the costs of health-care coverage, including higher co-payments and premiums.

        “They don't want to hear that,” Mr. Shirey said. “But we are going to have to be honest with our employees about the need for them to share the costs of health care.”

        Throughout the 1990s, income-tax revenues grew each year before leveling off last year.

        Other major sources of city income are in danger as well, Mr. Shirey said.

        Total general-revenue funds are up only 0.2 percent so far this year — far less than the 5.2 percent growth the city administration projected.

        President Bush is likely to sign a budget package that eliminates federal estate taxes. Cincinnati is counting on about $15.7 million in state estate taxes this year, but Mr. Shirey told council he believes it is only a matter of time before the Ohio General Assembly follows Congress and moves to cut or eliminate estate taxes.

        The Ohio General Assembly, Mr. Shirey said, has already frozen the amount it distributes to city government through the Local Government Fund. Cincinnati is expecting $32 million from that fund this year.

        Meanwhile, the city — which has an operating budget of about $308 million this year — is seeing its costs continue to rise, Mr. Shirey said.

        By the end of June, Mr. Shirey said, he would deliver to council a plan for cost cutting.

        Councilwoman Alicia Reece said that warnings by Mr. Shirey and other city officials last year of budget shortfalls did not materialize.

        “Why should we think this is different?,” Ms. Reece asked.

        Mr. Shirey said he is offering council a month-by-month analysis of city revenues “so we don't come in here sounding like Chicken Little.”

        “But I see nothing in the numbers that tell me we are going to end up with 5.2 percent growth in revenues,” Mr. Shirey said.


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