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Akron losing millions of income tax dollars, bracing for budget cuts

Posted at 5:37 PM, Apr 30, 2020
and last updated 2020-04-30 19:02:20-04

AKRON, Ohio — The city of Akron expects to lose millions of income tax dollars in the coming months, and as a result, Mayor Dan Horrigan said "tough decisions lie ahead" when it comes to balancing the budget.

Based on an economic analysis, the city estimates an overall revenue drop between 20 to 35%. Horrigan said federal CARES Act funding has not been made available to sustain core city services, which is putting a further strain on municipal budgets.

"It's going to be significant for cities, and I would say especially for Ohio cities, because we are one of the few states that really rely a lot on income taxes and economic activities," Horrigan told News 5 during an interview via FaceTime.

Horrigan said with many businesses still closed from the coronavirus pandemic and jobless claims on the rise, the city is dealing with a dramatic loss in income tax revenue, which accounts for 58% of the city's budget.

"There's going to be some very difficult decisions and they're not going to be popular," Horrigan said.

Horrigan said the city's finance team is working with departments to identify savings, while waiting for more detailed tax revenue data, but serious cuts to services and programs are likely.

City employees could face furloughs and layoffs this summer.

On Monday, about 135 city employees who were on "temporary emergency leave" will be allowed to return to work. About 320 workers remain on furlough.

Horrigan said as he works to balance the budget in these challenging time, cuts could be made "across the board."

He said the city may have to cut back on road resurfacing projects and trim maintenance works at Akron parks.

"The number of times that we mow parks and trim trees, are we going to have enough people to do that?"

The mayor said a plan to build a new fire station on West Market Street will be delayed and a new class of firefighters will be put on hold. He would not rule out making further cuts to the fire and police departments.

"To me, those are the last things that you want to look at when it comes to police and fire. Those are key city services and so I'm loathed to be able to do that, but like I said, I have to look at every option in the toolbox to make sure that budget is balanced," Horrigan said.

Aside from income tax money, city officials believe $500,000 to $750,000 will be lost by canceling summer festivals and concerts at Lock 3. On top of that, the city is preparing for a noticeable decline in gas tax money since fewer people are working or traveling.

"If they're driving less and filling up their cars less, they're generating less gas tax revenue. The state is going to collect less and obviously they are going to pay out less," the mayor said.

The city expects to announce some budget changes within three weeks, particularly around modifications to planned projects and services for 2020. Some of the bigger decisions will be depend on April and May tax revenue and will be part of an evolving decision making process, according to city spokeswoman, Ellen Lander.

The mayor said there has been a back-and-forth discussion about city pools, but he hopes to open them this summer.

"If there's a way to open those and do social distancing, these are some of the minimal things that we can continue to try to do, I think, is to provide some of that recreation."