Upper Arlington finance officials expect the city once again will rake in a record total of income-tax collections when they close the books on 2018.
In each year since 2010, the city of Upper Arlington has received increasingly higher income-tax collections, according to its finance department.
Do you approve of how the city of Upper Arlington is spending the additional revenue generated by Issue 23?https://t.co/UzNmSgO9sQ— ThisWeekNEWS (@ThisWeekNews)December 12, 2018
That trend appears likely to hold true in 2018.
Data from the city's finance department show tax collections were $13,594,511 in 2010.
Those numbers have increased steadily, reaching $26,107,668 in 2017, according to city information.
By the end of November this year, finance director Brent Lewis reported the city had collected $27,057,882 in income-tax revenue and he expects the year-end total for 2018 to be around $28 million.
"Needless to say, 2018 has been a great year," Lewis said.
Several factors contribute to the trajectory of higher collections, according to Upper Arlington officials, including a successful economic-development program, strong local and national economies and -- perhaps most importantly -- voter approval of Issue 23 in 2014, which increased Upper Arlington's city income-tax rate from 2 percent to 2.5 percent.
Issue 23's effect
At the time Issue 23 was floated to voters, city officials promised the $3.5 million in new annual revenue would be used to fund infrastructure maintenance and upgrades, including streets, stormwater systems, curbs, gutters and parks facilities.
That increase went into effect Jan. 1, 2015, and has "resulted in significant growth," Lewis said.
"Prior to the passage of Issue 23 in November 2014, increases in income-tax receipts could be attributed to the improvement of general economic conditions for Upper Arlington employers and residents," he said. "This includes the addition of jobs throughout the community, especially in the Kingsdale and Lane Avenue corridors.
"With the passage of Issue 23, the city has seen significant growth in income-tax receipts due to the increased rate."
However, Lewis said, estimates continue to exceed expectations because of "improving general economic conditions and effects of the city's proactive economic-development program."
Use of funds
The collections help the city's bottom line because income-tax revenue is deposited into two funds.
Lewis said 72 percent goes into the city's general fund, which supports day-to-day operations of the city and its departments.
The remaining 28 percent goes to the Capital Asset Management Fund for capital improvements, or to pay off debt issued for capital improvements, such as road, sewer and gutter work, among other projects, he said.
"The 28 percent allocated to the CAM encompasses the additional 0.5 percent dedicated solely for capital improvements -- Issue 23 -- plus an amount to cover previously issued capital-related debt," Lewis said.
Income taxes represent the city's most significant source of revenue, he said.
He noted that as Upper Arlington and other local governments have experienced revenue reductions from the state's Local Government Fund and elimination of the estate tax, a strong income-tax base has become increasingly important.
"We are making record levels of investment in our infrastructure to address a backlog of needs," Lewis said. "A diverse and growing income-tax base is critical to the city being able to fulfill its commitments to providing exceptional services and making the necessary reinvestments in our community."
One example, he said, is the recent completion of a comprehensive plan for the Upper Arlington Parks and Recreation Department.
Upper Arlington City Council President Kip Greenhill credited a strong national economy for some of the local income-tax gains.
He said city officials' actions in recent years to attract developments such as the Ohio State University Wexner Medical Center office at Kingsdale and two hotel projects on Lane Avenue have been "sensible" strategies that have brought higher-paying jobs and more income-tax revenue to the city.
"I think everyone in the city should be very pleased with the increase in revenues," Greenhill said. "First, it's a strong economy nationwide, but secondly, I think the city has been very aggressive in seeking sensible economic development."
Prior to being elected to City Council, Michele Hoyle was part of a financial task force advisory committee that recommended the city seek Issue 23 in November 2014.
Since the city began collecting Issue 23 revenue, it has spent $20.4 million (2015), $16.57 million (2016), $15.75 million (2017) and $15.31 million (2018) on capital improvements, she said.
"Our whole goal was to allow for reinvestment in the community and to stay at a level our residents expected," Hoyle said. "It's paying off. Issue 23 provided us with the resources to reinvest and make our infrastructure what it should be in a community like Upper Arlington.
"I feel like our work now is showing some results. A lot of good things are happening and it's because people ... laid some good groundwork, and I mean (city) staff, as well."
Lewis said he expects income-tax collections to increase again in 2019, but he doesn't believe they'll be as robust as this year.
He said his office is "conservatively" estimating a 2.25 percent increase in collections "based on historical averages."
"The upward trajectory in income-tax revenues affirms that the city is attractive to the business community, thanks to our location, access to the region and exceptional community amenities," Lewis said. "The city's goals and strategies for economic-development expansion are effective and reaping rewards, with the business community growing and diversifying, which will position us to better weather future economic downturns."