The next city of Cincinnati budget has a projected deficit of $29.5 million. That’s more than double the deficit in the current budget, but less than several years over the past decade.
Budget Director Andrew Dudas says general fund departments have been asked to prepare for cuts up to 5.1%.
"Reductions don't have to be the only solution to closing that deficit," Dudas said. "As we've done in past years with deficit situations, it's usually a combination of additional revenue, increases in revenue along with expenditure reductions, and I expect the same to occur this year."
Cities like Cincinnati get significantly less from state shared revenue than they used to. The amount allocated to Cincinnati in fiscal year 2026 (about $16.2 million) is 60% less than in 2011 ($40.7 million) after the state imposed cuts to the Local Government Fund.
Cincinnati has faced a general fund deficit for 10 of the last 13 fiscal years. Federal pandemic stimulus from the American Rescue Plan Act filled significant funding gaps between 2021 and 2025.
What's the timeline for passing a city budget?
City Council has started the months-long process of collecting input from residents and city departments. The first public hearing last Wednesday drew about 20 speakers. Most advocated for a few specific nonprofits asking for funds this year.
City administration will host a "Budget Basics" virtual information session March 23.
City Council will hear from residents at two more public hearings in March:
- Wednesday, March 11 at 5:30 p.m. at North Avondale Recreation Center (617 Clinton Springs)
- Monday, March 16 at 5:30 p.m. at Sayler Park Recreation Center (6720 Home City Ave)
Then, department heads will present their needs and budget requests to Council at several meetings in March and April. Council will then vote on a policy motion in mid-April; that's the document City Manager Sheryl Long will use to create the first draft of the budget.
Long is expected to transmit her first draft to Mayor Aftab Pureval by the third week of May. The mayor and city manager typically hold a joint press conference to publicly release the first budget draft.
A final public hearing is expected the first week of June. Residents also can give feedback on the budget proposal during regularly scheduled meetings of the Budget and Finance Committee (Mondays at 1 p.m.) and the full City Council (Wednesdays at 1:30 p.m.).
Though City Council has until June 30 to vote on the final budget, typically the final vote occurs in mid-June.
Where does city revenue come from?
The majority of revenue comes from income taxes, also called earnings taxes. Here's the breakdown of revenue for FY26 (the current budget):
- Earnings taxes: 65.1%
- Property taxes: 8.4%
- State shared revenue: 2.8%
- Casino tax: 1.7%
- Investments: 4.4%
- Parking meters: 0.3%
- Other revenues: 17.3%*
* 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
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 2026 and fiscal year 2027. 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 officer 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 includes restricted funds like Metropolitan Sewer District capital improvements, the convention center and stormwater management.
The city also can 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.
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