City auditor Richard Harris said Reynoldsburg's income tax revenues were up by a little more than 15 percent in 2011, but cautioned that this doesn't necessarily point to an overall economic recovery.

City auditor Richard Harris said Reynoldsburg's income tax revenues were up by a little more than 15 percent in 2011, but cautioned that this doesn't necessarily point to an overall economic recovery.

It could be because businesses are being more productive without hiring more people, he said.

Harris said the size of the increase is somewhat misleading because of one-time payments of net-profit taxes from a large company whose net profits were up 107 percent over the previous year.

"It went up to $11,600,000 in 2011, and the year before was a little over $10 million," Harris said. "It was a very good year in income tax, but the thing with businesses is, their fiscal year is not necessarily a calendar year and a lot of times, like any business, they can get extensions, so some of this was money from the year before."

Harris said some of the money received in 2011 could have been paid to the city in 2010, but because of a possible audit or extension situation, it came in later.

"Much of it was a net-profit situation, so I think you're seeing companies are having people be more productive and are making more profit and not necessarily hiring new people," he said. "It's like what you're seeing on Wall Street: You're seeing profits from companies going up dramatically, but they've got $2.5 trillion on their balance sheet in cash. They're not investing in the economy for whatever reason."

Harris said money that comes in through Reynoldsburg's income tax is broken down through a formula and placed into various city accounts; 84 percent goes to the general fund, 14 percent goes to the debt retirement fund and 2 percent goes to the capital improvements fund.

The city is still projecting a $1.1-million budget deficit this year, he said.

"Obviously, the mayor is now working on this year's budget so we'll see what, if any, changes council's going to make, or what he and council agree to," Harris said.

Mayor Brad McCloud said he has been looking over options to keep the city operating normally through 2012.

One option is transferring about $2 million in unappropriated funds over to the city's general fund, but McCloud said if that happens, the city couldn't do it again in 2013.

"The big problem with 2013 is we're going to get another $150,000 drop in the state's Local Government Funds and we're going to lose the estate tax, which is about $300,000 a year," Harris said.

"On top of what we've got now, there's another $450,000 that the state is taking away from us, so you can see the problem," he said.

Harris said by the time the final 2012 budget is worked out, the 2013 tax budget will have to be dealt with.

"Once you pass this budget, by the first of May I'll be coming in with the tax budget for 2013, and the whole scenario starts over again," he said. "It's not going to go away. It's still going to be here.

"This whole situation on being short of money is not something that's peculiar to us," he said. "You're seeing it in Hilliard and you'll start seeing it in places like Grove City and other suburbs.

"Eventually, they're going to have to go back to the ballot and ask for more money, too," he said.