Some tax drop, but hope for future
- Published: July 15, 2010
The income tax decline in the Yellow Springs school budget has been news in recent weeks, and Village government has also seen a downturn in income tax in the past two years. However, the Village tax loss is significantly less than that of the school district, and Village Manager Mark Cundiff sees reason to believe that the worst is over.
“I’m cautiously optimistic,” Cundiff said in an interview last week. “There are a lot of signs that point toward optimism.”
Hopeful signs include the return of Antioch College, expansion of YSI, the largest local employer, and the beginning of a return on efforts to recruit and retain business by Sarah Wildman, the new Village economic sustainability coordinator, according to Cundiff.
“It’s amazing how much more proactive we can be with her devoted to this,” he said, describing Wildman as highly energetic.
But these efforts will take time, and the Village still anticipates some continuing income tax decline in 2010. The diminished revenues mean that some capital projects may be postponed, and that it’s been necessary to eat into the reserve fund in the Village general fund budget, according to Village Finance Director Sharon Potter. Both Potter and Cundiff believe that because this year’s income tax drop is less than last year’s, the worst is over in the local economy.
“I’m assuming that the downturn has leveled off, and businesses don’t seem to be closing,” Potter said. “But we don’t expect an increase in revenue until next year.”
Potter will present the Village tax budget for 2010–2011 at the upcoming July 19 Council meeting. The tax budget is an estimation of Village revenues and expenses for the coming year.
A smaller drop this year
Village income tax differs from the school district income tax in that the Village receives withholding tax from the wages of all who are employed in Yellow Springs, whether they live in the village or not, while the schools receive income tax on both earned and unearned income of villagers regardless of whether they work in town. The Village income tax provides the largest part of the Village revenue stream, with the taxes providing more than 50 percent of the $2.1 million general fund budget that funds most Village services. The Village utility funds — water, sewer and electricity — are self-supporting through fees.
In the first six months of 2010, the Village has seen a 4.6 percent, or about $30,000, drop in income tax on both wages and net profits of local businesses, compared to the 23 percent drop in the school income tax for the 2009–2010 school year. The school tax’s larger drop came mainly from decreased capital gains, and can be linked to the 2008 stock market volatility.
The Village income tax, being a wage tax, reflects the health of local businesses, and this year’s drop of 4.6 percent is less than last year’s drop of about 12 percent. That larger 2009 loss could be linked to the 2008 closing of Antioch College and downsizing at the Antioch Company, according to Cundiff.
According to figures from the Regional Income Tax Agency, or RITA, the Village for the first six months of 2010 had received $602,952 from income taxes compared to $632,175 in the same period last year.
The RITA report shows drops in distributions from most large local contributors, including YSI Incorporated, for both withholding taxes for employees and net profits. The YSI tax on net profits dropped to $7,230 so far this year compared to $36,591 last year, and YSI withholding taxes dropped $11,557 in the first six months of this year.
However, according to YSI President Rick Omlor, those drops do not reflect a decline in the company’s profits or number of employees, but are rather linked to a variety of factors including timing of payments.
“The bottom line is our tax payments, both payroll and income, have continued to trend upward, and we see that trend continuing in 2010,” Omlor wrote in an e-mail.
In recent months, YSI was one of only six businesses statewide to receive a Third Frontier grant. In collaboration with Riehl Engineering and the University of Cincinnati, YSI received a $1.1 million grant to develop an advanced sensor for monitoring nitrate levels in natural waters, a new project that will lead to some job creation, Omlor has said.
According to the RITA information, withholding income tax from the Antioch Company was down about $2,000 in 2010 over 2009, and that year’s TAC revenues had been significantly down from the year before, as the company continued to downsize its Yellow Springs operations after moving most of the business to St. Cloud, Minn.
Most recently, the company let go of five employees in May 2010 due to new machinery that streamlined operations, according to Creative Memories Human Resources Director Laurie Bryant, who is located in Yellow Springs. The company currently employs 40 workers in its Yellow Springs plant, mainly manufacturing the paper materials for Creative Memories, and does not anticipate any more layoffs, Bryant said.
Other drops in 2010 income tax came from Vernay Laboratories, from $19,105 in June 2009 to $14,590 in June 2010; from Wright State Physicians, which closed its clinic in Yellow Springs last year, so that the Village lost the clinic’s almost $4,000 in withholding tax; and the College Revival Fund, which provided $11,435 in withholding income tax from funding Nonstop in 2009 and only $688 in 2010 since the alumni are no longer funding the venture due to the re-opening of Antioch College.
Some of the income tax declines were made up in the first part of 2010 by increases from other tax contributors, mainly from individuals and some smaller Yellow Springs businesses, including Ertel Publishing and Rita Caz Jewelry Studio, along with several companies providing contracted help for local companies or temporary help for local Village projects.
Feeling positive about future
The most significant good economic news in the village is the rebirth of Antioch College, according to Cundiff. The college, which re-opened in September 2009 and currently has about 30 employees, expects to expand as it heads toward welcoming its first group of new students in the fall of 2011.
“The college coming back is nothing but positive,” Cundiff said. “It’s not a magic pill that will solve everything, but it will go a long way.”
The growing college will contribute withholding income taxes to the Village — so far in 2010, the Village has not received income tax from the revived college — and a growing student body will help to strengthen downtown businesses, according to Cundiff, who also sees many potential “spin-offs” from college creative and intellectual efforts.
A college town is also attractive for retirement communities, and with the amount of unused land on the Antioch College campus, “we would be a good market for something like that, with a compact and walkable downtown,” he said.
Cundiff is also exploring opportunities for the village to link up with the supply chain of alternative energy production, possibly attracting manufacturers of some of the “widgets” that go into solar or wind energy, he said, stating that he recently attended an Ohio Department of Development presentation on the topic.
Another area that seems a good fit for the village is “anything that can use an agricultural product,” such as organic foods, according to Cundiff, who said a microbrewery is currently looking to launch in town.
Wildman has on deck some interesting possibilities that he could not be specific about at this point, Cundiff said, and she’s also working to help strengthen current local businesses.
While he’s cautious, Cundiff said that in general he believes the Village is doing better than most small municipalities, and that the future looks promising.
“I still have my fingers crossed that things are getting better,” he said.