Hamilton County, Ohio, commissioners approved a sales tax increase that will bring in an extra $30 million to cover a projected $28 million budget shortfall in fiscal 2019.
The tax increase takes effect in October, pushing the county's sales tax rate to 7.2% from 7%.
The county, which includes Cincinnati, attributes the deficit to state aid cuts and the loss of $9 million due to the state’s decision to no longer allow sales tax to be charged for Medicaid services.
If the county did nothing, commissioners said they would have had to make across the board cuts, possibly as high as 17%.
The county board voted 2-to-1 to raise the sales tax.
"What benefits will the taxpayers feel?" said board president Todd Portune. "They're going to see a solvent county. They'll be receiving the services that we provide and they want and need."
Commissioner Chris Monzel opposed the sales tax. "We should look at reducing costs," Monzel said. "We can always find other ways to do this."
The county isn’t alone in eyeing increased taxes as a solution for its shortfall.
The Southwest Ohio Regional Transit Authority board is considering whether to put a countywide tax levy on the November ballot to cover a projected budget deficit of $6.4 million next year. SORTA has until the end of July to submit ballot language to the Hamilton County Board of Elections.
Cincinnati is considering a possible increase in its earnings tax as a measure to close a $31 million deficit. Cincinnati's earnings tax is 2.1%, the lowest among major cities in Ohio. It hasn't gone up since 1988. That tax increase would have to be approved by voters.
Cincinnati’s efforts to raise taxes come as it looks to fund a new Major League Soccer stadium with public dollars.
FC Cincinnati was awarded an MLS franchise at the end of May. As part of the deal the club plans to build a $212 million stadium. The city would be on the hook for about $34.8 million. The funds would go toward infrastructure costs such as site preparation and the construction of 750 new parking spaces. About $25 million will come from bonds secured by the city’s share of county hotel tax revenue and tax increment financing.
The bonds would be issued through the Greater Cincinnati Redevelopment Authority.
In March 1996 Hamilton County voters approved a one-half cent increase in the county sales tax. This increase was used to pay for all obligations related to Paul Brown Stadium and Great American Ball Park, the stadiums for the National Football League Cincinnati Bengals and Major League Baseball's Cincinatti Reds.
The county has issued $623.1 million to fund those two stadiums.
Moody’s Investors Service rates the county’s general obligation bonds Aa2 and the county’s sales tax revenue bonds A1. The sales tax revenue bonds are rated A-plus by Fitch Ratings.
