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Council passes a city budget the mayor says provides 'strong financial footing'

City Hall as seen from Plum St. in Cincinnati, Ohio, Wednesday, May 12, 2021.
Jason Whitman
/
WVXU
City Hall as seen from Plum St. in Cincinnati, Ohio, Wednesday, May 12, 2021.

The next city of Cincinnati budget includes nearly $22 million in one-time spending, using up the last of the city's federal stimulus from the American Rescue Plan Act. City Council passed the final budget Wednesday.

For the first time in a few years, ARPA money was not needed to fill a budget deficit, thanks to revenue from property and income taxes coming in higher than expected.

"With this budget, we are proudly on strong financial footing, and we are making investments in our employees, our basic services, our key priorities and future growth to ensure a sustainable future," Mayor Aftab Pureval said. "While this year's budget is balanced — in part due to difficult decisions this body has made over the last two years — I must caution us that we are still projecting deficits that will only grow over time. As we have said, there will continue to be difficult decisions ahead."

Two Council members opposed parts of the budget, which is voted on as a series of several ordinances. Jeff Cramerding and Victoria Parks also said they felt there wasn't enough time for Council to fully understand the budget.

"I think collectively — and I certainly include myself in this — I think we need to pick up our game when it comes to this budget. This is the most important thing that we as a Council, and we as a city do," Cramerding said, adding Council should have provided city administration with more specific guidance in the priority budget, which Council passes as a guide for the city manager to follow.

"And this is going to be the unpopular part: part of the priority budget should be what are not our priorities," Cramerding said. "We've got programs in the city that have been funded for decades and decades from previous administrations. Should they be funded or not? I don't know, but we've never taken a collective look."

Most of the budget is unchanged from City Manager Sheryl Long's recommended budget draft, released May 24. It includes $17.6 million of one-time spending in the capital budget:

  • Economic development initiatives: $4.35 million
  • Neighborhood business district improvements: $3 million
  • Property development improvements: $1 million
  • Green Cincinnati sustainability initiatives: $5 million
  • Lifecycle asset acquisition and replacement: $500,000
  • Fleet replacements: $2 million
  • Home Enhancement Loan Program (HELP): $500,000
  • Lunken Airport improvements: $1 million
  • 311 Cincy technology upgrades: $250,000

Mayor Pureval recommended spending about $4 million that would have been set aside in a reserve fund for contingencies during FY 25. Pureval's changes include funding for several organizations under Leveraged Support, and a $15,000 merit increase for City Manager Long.
See the full list of the mayor's changes below (article continues after):

City Council made further changes to the budget this week before taking a final vote Wednesday. Council reduced funding for several line items, including:

  • $2 million from the General Fund for the Neighborhood Business District Improvement Program ($1 million remaining)
  • $500,000 from a Capital Fund for maintenance of the Duke Energy Convention Center (which is under renovation this year)
  • $500,000 from street rehabilitation ($12,957,500 remaining)
  • $380,000 from reserve for contingencies ($4,640,000 remaining)
  • $250,000 from pedestrian safety improvements/major street calming ($527,000 remaining)
  • $75,000 from the Neighborhood Support Program (for community councils - $550,000 remaining)

Council's additions incude $860,000 for a new program related to the Connected Communities zoning changes passed last week. Council Member Reggie Harris says it will be similar to the recent "quick strike" fund, which gave grants to community development corporations for site acquisition. Council also added $805,000 to external organizations through leveraged support.

Learn more about the city budget

Click to jump to a section

General Fund

The operating budget includes services provided by the city, like police patrols, filling potholes, trash collection and operating the water treatment system. It includes wages for city employees and the cost of supplies needed to deliver services.

The operating budget includes the General Fund, where City Council has the most flexibility in funding decisions.

DepartmentFY 25 Budget
Police$181,617,160
Fire$152,771,300
City Manager's Office *$50,099,920
Recreation$19,479,750
Public Services$16,629,140
Buildings & Inspections$13,854,640
Law$12,516,900
Parks$11,556,710
Finance$8,308,430
Enterprise Technology Solutions$7,616,370
Community & Economic Development$4,430,670
Human Resources$5,438,490
Transportation & Engineering$3,933,040
City Council$2,396,950
City Planning & Engagement$12,124,770
Economic Inclusion$2,018,790
Citizen Complaint Authority$1,413,140
Office of the Mayor$2,018,790
Clerk of Council$796,350

*The City Manager's Office includes the Emergency Communications Center.

You can learn more about how each department spends its budget on the city's open data portal Cincy Insights:

Public Safety

The police and fire departments, combined, make up about 59% of the General Fund in the proposed FY 25 budget.

The proposed FY 25 budget includes a 0.6% increase for the CPD budget and a 3.2% increase for the CFD budget. Sworn police and fire employees are represented by labor unions and are budgeted for a 2% wage increase during this fiscal year.

CPD alone makes up about 32% of the General Fund in the budget proposal.

The police budget has increased 44% over the last 10 years, and the fire budget has increased 65%, compared to a General Fund increase of 59% during that time.

Human Services Fund

The city's Human Services Fund is administered by the United Way, which uses a competitive application process to issue grants to organizations based on council-established priorities.

The budget draft includes about $8.55 million for the fund, about 1.5% of the General Fund.

From 2004 to 2017, the city budget for the HSF did not exceed 0.8% of the General Fund. Council approved a plan in 2017 to incrementally increase the percentage for the Human Services Fund until it reached 1.5% in 2023.

Council sets the priorities for the fund ahead of time:

  • Between 25% and 33% for an Impact Award — in this case, eviction prevention and housing
  • 20% to youth gun violence prevention and reduction
  • 25% to comprehensive workforce development
  • Between 10% and 18% for supporting, securing and stabilizing housing for high-risk populations
  • 10% for Project LIFT (direct support for emergency anti-poverty programs)
  • 2% for overhead

A volunteer Human Services Advisory Committee (HSAC) votes to recommend which organizations and programs should get funding.

Leveraged Support

The other mechanism for funding outside organizations is leveraged support, included as direct allocations in the budget.

This is the second year organizations have had to formally apply for funding instead of lobbying council members directly. Council established the new process to take some of the politics out of the equation.

It defines "leveraged support" as "(f)inancial support from the City of Cincinnati to an external organization (i) as general operating support to fund their work in the City or (ii) as funding for a specific program aimed at addressing a public need in the city."

Council set seven priorities for the funding; grants were limited to between $50,000 and $500,000, with larger awards considered for "extraordinary circumstances."

The Center for Closing the Health Gap is the only organization receiving an award above that threshold, with a total $750,000. The city manager recommended $500,000 and the mayor's budget adjustment included an additional $250,000. The next highest award is $350,000 for the African American Chamber of Commerce.

The city received 168 applications for leveraged support, each evaluated for a score out of a total 90 points.

See the full list of leveraged support awards below (article continues after):

Several outside organizations do not have to apply for funding because they manage city assets or programs. Those include:

  • 3CDC funding for Fountain Square, Washington Park and Ziegler Park
  • Findlay Market operating budget support
  • The Port
  • Women Helping Women Domestic Violence Enhanced Response Team (DVERT)

The budget includes $550,000 for Community Councils, an increase from last year's $425,000.

Pension Fund

Experts say Cincinnati needs to immediately increase its annual contribution to the retirement system for city employees. The pension fund is about 69% funded, down from 77% in 2015.

A federally mandated settlement agreement requires the city to put no less than 16.25% of active salaries into the fund each year.

The FY 24 budget included 17% of active salaries, the first increase to the minimum contribution since 2016.

This budget increases the contribution again to 17.75% of active salaries.

Cincinnati Southern Railway Sale

The next city of Cincinnati budget includes a detailed plan for spending about $29 million in revenue from the voter-approved sale of the Cincinnati Southern Railway.

Norfolk Southern paid the city $1.6 billion to purchase the railway. That money has been invested, with projected annual returns of about $55 million a year.

The first investment revenue won't be available until next year, but the city stopped receiving lease payments once the sale closed in mid-March.

"This is a bridge year while we wait for the fund to generate returns," said City Manager Sheryl Long.

RELATED: The $1.6B fund from selling the Cincinnati Southern Railway has grown about $14M in 2 months

The CSR Board of Trustees recently voted to send the city $36 million to fill that gap for the rest of fiscal year '24 (which ends June 30) and for fiscal year '25 (which starts July 1). That $36 million payment primarily comes from transaction fees paid by Norfolk Southern as part of the sale agreement.

After filling a gap for the rest of fiscal year '24, the city manager has budgeted $29.2 million for fiscal year '25. That's about $2.8 million more than the city would have gotten from the Norfolk Southern lease this year.

The city's plan for spending the money started nearly a year ago, before voters even approved the sale. City Manager Long's "Cincy on Track" proposal has been updated for this fiscal year.

Long says more than 80% of the money in this year's plan is going to neighborhoods where the median income is less than $50,000.

"Huge investments are coming to majority Black neighborhoods like the West End, Walnut Hills and South Fairmount," Long said. "And Westwood — our city's largest neighborhood in terms of square miles — is approximately set to receive the largest investment in this round of funding."

Like all funds coming from the CSR Board, the city can only spend the money on maintaining or improving existing city-owned infrastructure. That limit is spelled out in state law.

City Manager Long recommends splitting that money between five departments. Long and department chairs presented the plan to City Council's Budget and Finance Committee Tuesday.

See the full presentation below (article continues after):

More than half of the money — $17.9 million — is proposed for streets and bridges through the Department of Transportation and Engineering.

DOTE Director John Brazina says about $13.5 million will be spent on re-paving streets in 12 neighborhoods: Carthage, the Central Business District, College Hill, East Westwood, Mt. Adams, North Avondale, North Fairmount, South Fairmount, Queensgate, Walnut Hills, the West End, Westwood, and College Hill.

RELATED: How Cincinnati decides which roads get repaved and when

Other DOTE projects include about $3 million to renovate Victory Parkway in Walnut Hills and East Walnut Hills; and about $1.4 million for traffic signals, including new flashers for school zones.

The Department of Public Services will receive about $2.7 million. Most is slated to replace the roof of the Fleet Management garage. The rest would go to restore the parking deck at Police District 4 headquarters, and replacing the roof at a building in East Price Hill used for police special services.

The Health Department is set to receive $2.1 million. About half is slated for "structural integrity" projects at several health centers. Another $1 million is for expanding the parking lot at the Price Hill Health Center.

The Recreation Commission will receive $3.7 million; of that, $1.3 million is divided among outdoor and athletic facilities like baseball fields and basketball courts, and $2.3 million is planned for recreation center renovations in Bond Hill, Price Hill, Pleasant Ridge, Sayler Park, Corryville, North Avondale, Mt. Auburn, Madisonville, and Westwood.

The Parks Department is set to receive $2.7 million. Director Jason Barron says most will go to the Sinton East Operations Facility; $150,000 for repairs at Washington Park; and $750,000 for maintenance and repairs at other properties.

How to Understand the City Budget

Where can I see budget information online?

Documents are published on the city website under the Finance & Budget page: Cincinnati-oh.gov/finance/budget

There are also links to prior years' recommended and approved budgets.

Why does a new budget start in July instead of January?

The city budget is based on fiscal year rather than calendar year. Fiscal year 2025 (often abbreviated as FY 25) begins July 1, 2024 and ends June 30, 2025.

Where does city income come from?

The majority of revenue comes from income taxes, also called earnings taxes. Here's the breakdown of revenue for FY 25:

  • Earnings Taxes: 63.6%
  • American Rescue Plan Act: 4.4%
  • Property Taxes: 8.5%
  • State Shared Revenue: 2.7%
  • Casino Tax: 1.8%
  • Investments: 2.4%
  • Other Revenues: 16.5%*

* Includes: license and permit fees; admission taxes; short-term rental excise taxes; buildings and inspections fees and permits, etc.
The current city income tax is 1.8% of gross earnings and the revenue is divided into three categories:

  • 1.55% for the General Fund
  • 0.15% for permanent improvements (capital)
  • 0.1% for maintenance of city infrastructure

The most significant change to city revenue in recent years is a reduction in the Local Government Fund (state shared revenue). The state imposed cuts to this fund about a decade ago; the amount allocated to Cincinnati in calendar year 2023 (about $16.3 million) is a 60% reduction compared to 2011 ($40.7 million).
What makes up most of the budget?

Of the General Fund, 80.8% goes to personnel and benefits. And, 83.4% of city employees are represented by labor contracts negotiated with a union.

Who decides how to spend taxpayer money?

The process begins with City Manager Sheryl Long, who worked with her team to prepare the first draft of a budget. That draft is passed along to Mayor Aftab Pureval, who has the option to make any changes before it goes to council.

Council has ultimate authority over the budget and must reach a majority agreement (five of nine council members) to approve the spending plan.

How does a biennial budget work?

The city budget technically covers two years at a time, but council still votes to approve funds every year.

Last year, council approved a budget for fiscal year 2024 and fiscal year 2025. This year, council will vote on a "budget update" to account for differences in actual revenue compared to expected revenue. Practically speaking, however, significant changes are typical in a budget update year.

What's the difference between operating and capital budgets?

The operating budget includes the services provided by the city, like police patrols, filling potholes, trash collection and operating the water treatment system. It includes wages for city employees and the cost of supplies needed to deliver services. The operating budget includes the General Fund, where City Council has the most flexibility in funding decisions.

General Fund dollars can be used for capital projects, but capital dollars cannot be used for operating expenses.

The capital budget covers purchasing or improving city assets like buildings and vehicles. It includes assets that cost at least $10,000 and last at least five years. The capital budget includes some cash and some borrowing.

The overall capital budget for FY 24 is about $310 million, which includes restricted funds like Metropolitan Sewer District capital improvements, the convention center and stormwater management.

The city can also take on debt for capital projects, but the amount of debt is limited by the amount of revenue expected from taxes — the city has to bring in enough money to make payments on the debt. If the city wanted to take on more debt for capital projects, council would have to approve an increase in taxes. Right now, the city issues bonds based on property taxes.

The city can't issue bonds on assets not owned by the city; that also applies to city-owned buildings with long-term leases like Music Hall's 100-year lease. Playhouse in the Park is another example of a city-owned building that can't use bonded capital for improvements because of long-term use agreements.

Where can I learn more?

https://www.cincinnati-oh.gov/budget/budget-engagement/

Local Government Reporter with a particular focus on Cincinnati; experienced journalist in public radio and television throughout the Midwest. Enthusiastic about: civic engagement, public libraries, and urban planning.