The city of Cincinnati faces a projected $16 million deficit next fiscal year. But there are still months left before the city's budget process wraps up.
City administration presented the tentative tax budget (TTB) to council's Budget and Finance Committee Monday. The rough forecast of expenditures and revenues is used to set the city's property tax rates.
Ohio law requires council to approve the TTB, set its property tax millage and present it to the Hamilton County Auditor by Jan. 15.
Rising expenses and the end of American Rescue Plan funding are driving the projected gap, Cincinnati Budget Director Andrew Dudas told council members. He said a projected deficit at this point in the process isn't uncommon.
"Generally the last several years, even going back prior to the pandemic, it would not be uncommon to be at $25 million to $30 million plus dollars in a deficit at this point in time," he said.
Last year, the city faced a roughly $22 million projected deficit at this time. It bridged most of that gap with American Rescue Plan Act dollars. It won't have that resource this year. Dudas says the city will need to find ways to reduce expenses and increase revenues to close its projected budget hole.
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The city's projected expenditures in Fiscal Year 2026 come out to about $556 million, while its expenses are projected to run about $572 million. Those revenues include an expectation that property tax collections will remain flat, as city administration recommends leaving the city's operating property tax millage at 6.1 mills. That's the maximum allowed by the city charter without voter approval.
The revenue projections also include an expected $7.6 million increase in city income tax revenues. That roughly 2% increase expectation is based on a projection from the University of Cincinnati's Economics Center.
The budget's expenditure projections include 3% wage increases for workers in the IAFF and FOP. Those increases were negotiated earlier this fiscal year. They also include an expected 3% increase for other trade union members employed by the city, though those increases will need to be negotiated as contracts expire next calendar year. The budget accounts for a 3% increase for city employees not represented by a union.
City Finance Director Karen Alder told council the city has time to get to a balanced budget before the start of the fiscal year July 1.
"We're very early on in the process," she said. "This is a tentative budget. We have a lot of months with which to fine-tune both our revenue and our expenditure estimates."