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Ohio's cities could soon feel fiscal impacts of COVID-19 pandemic

Cleveland
Posted at 6:37 PM, Apr 03, 2020
and last updated 2020-04-03 23:31:38-04

CLEVELAND — Several of Ohio's cities are likely to feel the fiscal shock of this pandemic in the next couple of months, according to an analysis from the Brookings Institution released this week.

The study shows cities like Columbus, Cincinnati, Toledo, Cleveland and Akron all rely heavily on income tax for their general fund revenue, meaning that when employment drops suddenly, so does that source of money for the city.

The analysis predicts Ohio's cities will see the impacts of this job loss within a month or two.

Policy Matters Ohio senior project director Wendy Patton said the job losses that came first during this recession and pandemic were concentrated in low-wage sectors.

"We have a concentration of low-wage jobs in employment services, temp services, in leisure and hospitality and in travel," Patton said. "One bright area that’s been in the economy has been oil and gas, but that is also hit hard too."

That sudden drop in employment, Patton said, "immediately hits your sales tax, because people, if they aren’t earning money, they can’t spend money. And if they aren’t working, they aren’t paying taxes."

She said cities and counties, but especially cities, "face a very tough time going into this double crisis of health and economic recession."

After dealing with two recessions over the last couple of decades, Patton said the federal government would need to play a role in responding to cities that have been hard-hit.

"In the last bill, the so-called CARES Act which is in response to the coronavirus, a fund of $150 billion dollars was set up for states and cities," Patton said. "Unfortunately, in a state like Ohio, it doesn’t go far enough. The state will get a portion of that money and the major cities and counties, with populations of greater than 500,000 get a share."

Patton said that leaves out medium-sized cities like Toledo and Dayton. She hopes future aid packages will address that need.

"There’s got to be substantial federal aid for this crisis, and how deep and how long that federal aid lasts will determine how we fare coming out of it," Patton said.

Patton also urged a more progressive income tax, which she said would be less burdensome on low-income workers and spread out the revenue base among the entire workforce, including the more-robust high-income sectors.