On November 15, 2022, in his first State of the City speech, Cincinnati Mayor Aftab Pureval cited a list of achievements— including progress in affordable housing, gun safety measures, and pedestrian safety—and then turned to the challenges ahead. The city’s budget deficit is expected to get worse with time, as expenses are growing faster than revenues. It’s “an existential problem,” the mayor said.
Pureval referred to a similar looming issue in the 1980s, the city’s deteriorating infrastructure, and the response: appointment of a blue-ribbon commission led by Procter & Gamble’s then-CEO, John Smale. He then announced the formation of a new task force led by P&G’s current chief executive, Jon Moeller. The commission would be charged with three tasks: “A deep careful review” of the city’s budget, an analysis of the city’s economic development strategy, and recommendations for future funding.
His request was in the tradition of Cincinnati civic and business leaders being asked to provide counsel to elected leaders. In 1984, the Phillips Commission created a comprehensive report on the city’s operations that was followed up by the Infrastructure Commission, chaired by Smale. In 2001, in the wake of civil unrest in Over-the-Rhine and downtown, the Cincinnati Action Now (CAN) Commission was created to identify police, community, and economic reforms. That ultimately led to the creation of 3CDC and hundreds of millions of dollars of investment in the urban core, as well as many other initiatives.
Sixteen months after Pureval’s announcement, his task force, which named itself the Cincinnati Futures Commission, released a 77-page deep dive into the city budget and recommendations to spur growth in population and city revenue. In an introductory note, Moeller calls it “a blueprint that can solve many of the city’s major challenges and usher in a decade of growth and prosperity in Cincinnati.”
That blueprint now awaits action by the mayor, city council, city departments, and the public at large.
Leading the study were Moeller, a 36-year P&G veteran and head of the $80 billion global company; Tim Spence, CEO of Fifth Third Bancorp, the $12 billion Cincinnati-based financial institution; Katie Blackburn, executive vice president of the Cincinnati Bengals; and Phillip Holloman, retired president and chief operating officer of Cintas Corp., a $9 billion enterprise, and cofounder of the Holloman Center for Social Justice. They were assisted by 30 commission members—leaders from the business, legal, not-for-profit, and labor sectors along with staff of the Cincinnati Regional Chamber, the Cincinnati Business Committee and the Cincinnati Regional Business Committee, P&G employees, consulting firm EY, and Cohear, which conducted focus groups.
Commission members or staff met with more than 800 people, more than 70 organizations, 16 city departments, each City Councilmember, the mayor, the city manager and staff, and previously elected city leaders.
The Cincinnati Futures Commission’s overarching goal was to find ways to generate growth in population, jobs, and revenue in the city of Cincinnati over the next decade. The 2020 census found that Cincinnati’s population grew modestly, by 4 percent, in the previous 10 years, reversing decades of population loss.
Yet, despite this good news and other positive signs—the revitalization of neighborhood business districts, job growth, and strong arts and culture and dining scenes—clouds loom on the horizon. The COVID-era federal aid that propped up city budgets is ending. The huge shift to remote work means a significant loss of earnings tax revenue for the city, as about 65,000 people went to work downtown every day pre-pandemic.
Complicating these immediate threats is a culture of complacency, both at City Hall and in the populace in general. “The city has not traditionally been guided by growth goals,” the report states. “The city lacks a bold vision for economic growth,” it says in another section.
Adding to this status quo attitude is a certain amount of skepticism among city residents, who have become accustomed to annual urgent reports about budget deficits only to see them solved, usually with 11th-hour workarounds or one-time infusions of money. Just 14 percent of respondents to a commission survey believed the city’s financial condition is “fair or poor.”
“The Futures Commission immediately recognized this as a challenge, as it is recommending significant changes that may come as a surprise to residents who are not closely following the longer-term structural imbalances in the City’s budget,” the report says. “However, the data showing a long-term unsustainable financial model is undeniable.”
The commission projects budget deficits beginning in fiscal 2026 and forecasts deficits growing each year through fiscal 2033, as remote work and its impact on earnings tax revenue, rising employee costs, and inflation contribute to a difficult budget environment. Cincinnatians have a higher tax burden than most of the 10 peer cities the commission examined. Much of that is due to taxes not levied by the city or Cincinnati Public Schools but by Hamilton County, particularly the property tax.
Looming over the long-term budgetary landscape is an obligation to fund the city employee pensions. Cincinnati is the only city in Ohio that has its own municipal employee pension fund, the report notes. Keeping its obligation to fully fund the pension system by 2045 will mean, on average, annual contributions of $60 million a year for the next 20 years.
Research also found that Cincinnati has the highest level of income inequality among the cities it’s benchmarked against. Cincinnati’s median household income is 10th out of the 11 cities (from St. Louis to Pittsburgh to Raleigh, North Carolina), and Cincinnati experienced the slowest growth in this group over the five years from 2016 to 2021. “Relative to peer cities, Cincinnati’s lack of overall prosperity is sobering,” the report says.
On the plus side, the city’s diversified economy is a strength, as no major industry category accounts for more than 17 percent of employment. And Cincinnati’s infrastructure maintenance needs received a huge amount of support with the sale of the city-owned railway and the resulting $1.6 billion trust fund devoted to infrastructure. Cincinnatians generally have a good opinion of their city’s public services, as a commission survey found that 75 percent rated basic services as “good or excellent.”
This was the landscape as the Futures Commission began its work. “Many cities are facing the real possibility of cutting back on services and decreasing investments into their communities,” the report says. “The Cincinnati Futures Commission was convened to confront these challenges and orient the city toward growth.”
The in-depth recommendations can be boiled down to one word: growth. The commission lays out a series of big goals it says would usher in a decade of growth in population, jobs, and income. If the goals are attained over the next 10 years, Cincinnati could add 26,000 new residents, 44,000 new jobs, a $21,500 increase in per capita income, and a $21,000 increase in earnings per job.
Achieving these goals will require change at City Hall, the commission says. “The city needs to implement a strategy, structure, and culture at City Hall that works toward these goals on a day-to-day basis. It is crucial that elected city leadership and the administration make it clear to city staff that these goals are a north star to strive for when approaching work.”
One of the Commission’s big recommendations is to establish an Office of Strategic Growth at City Hall, staffed by three or four people whose first order of business would be to conduct a review of the process involved in getting development done in the city “to understand all the structural and cultural roadblocks to development that currently exist, and plans to reform the process to orient it toward growth.” Mainly, the city’s response time to development proposals needs to be improved, and its process for permitting and approvals should be simplified.
Holding back new employers and job growth is a lack of development-ready sites, the report says, or “a dearth of sites that are ready to locate new projects.” To remedy that, the commission recommends creating a $100-million fund to identify and acquire job-ready development sites. The city could work with The Port, which is already doing this work, and an investment of $190 million to acquire and improve 500 acres of land is estimated to help create 9,200 total local jobs. “The long-term viability of the city is tied to its ability to grow and attract jobs and talent while increasing employment opportunities and incomes for city residents,” the report says.
Attracting 25,000 new residents over the next decade will require an increase in housing as well as improvements in urban neighborhoods. But over the previous decade, fewer than half of all neighborhoods have experienced a net increase in new housing units—even those with the hottest real estate markets, the commission found. “That trend has to be reversed for the city to achieve these growth goals,” the report says.
The biggest obstacle to housing growth is the lack of funding needed to gain control of key plots of real estate or fill gaps in development projects that exist. The commission recommends creating a $50-million neighborhood growth fund to accelerate investments in developing areas of the city. The fund could be used not only to acquire land for market-rate housing but also to repopulate neighborhood business districts and create mixed-use developments and other amenities that drive population growth.
The city has used financing tools to do this kind of work in some neighborhoods such as Madisonville, Northside, and College Hill, and the most notable example is 3CDC’s efforts in Over-the-Rhine. “But the city has never had a consistent and dedicated revenue stream of this size for this kind of Neighborhood Growth Fund,” the report says.
To address the shortage of affordable housing, the city is already investing $5 million a year in the Affordable Housing Leverage Fund maintained by the not-for-profit Cincinnati Development Fund. The commission recommended increasing that amount to $15 million a year, for a net additional spend of $100 million over 10 years. That funding would enable Cincinnati Development Fund to take full advantage of state and federal housing tax credits and other financing for affordable housing. “These funds—when leveraged to their maximum capacity—could create 500-600 affordable housing units per year,” the report says.
In comparing Cincinnati with 10 peer cities, the commission finds that Cincinnati has the biggest disparities in income between white and nonwhite residents. Improving the city’s economic life will mean growing incomes for nonwhite residents, as nearly half of the city’s population is nonwhite. To that end, the commission recommends scaling up an existing program called the Lincoln & Gilbert Initiative, a partnership among the Urban League of Greater Southwestern Ohio, the Minority Business Accelerator, the African American Chamber and other organizations to double the number of Black employer firms in city to over 1,000 by supporting entrepreneurship and providing technical assistance and back-office support. The commission suggests allocating $25 million to ramp up the initiative’s capacity.
All told, the commission recommends $290 million in new spending over 10 years, including the sites for jobs fund, the neighborhood fund, the affordable housing fund, and the Lincoln & Gilbert investment. That amount also includes $10 million for the Office of Strategic Growth and $5 million to beef up Homebase, a nonprofit organization that works to increase the capacity of neighborhood community development corporations.
In addition to that new spending, the commission forecasts $438 million in budget deficits that must be covered over the next 10 years—adding up to a total of $728 million in expenses above and beyond the city’s current operating budget.
How to pay for all that $728 million in new expenses? Almost half ($357 million) would be funded by an increase in the city earnings tax. Now at 1.8 percent, the commission recommends an increase to 1.95 percent, with some caveats.
Another $164 million would come from a fee for trash collection, which is currently paid for from the city’s general operating fund. The recommended monthly fee would be about $15.30 for each Cincinnati household and $7.60 for lower-income households. The rest (about $177 million) would come from holding down the growth of police and fire budgets, selling some city assets, redeploying some of the city infrastructure tax, expansion of parking enforcement, and other fees. See the recommendation details below.
The earnings tax hasn’t been increased in more than 50 years. An additional 0.1 percent would pay for most of the growth initiatives, such as the sites for jobs fund. Another 0.05% would go toward police and fire budgets, ensuring stable funding there. That would bring the total city tax on income to 1.95 percent, still below the earnings taxes in Dayton (2.25), Cleveland (2.5), Columbus (2.5), and Toledo (2.5).
The report calls this increase “a timebound, limited proposal” that could be achieved with a vote by citizens and should be used only for the purposes outlined by the commission. A time-limited tax increase would allow voters an opportunity in the future to review the need for the revenue and the investments it funds and possibly scale it back.
The commission says its support for an additional tax to support police and fire budget is contingent on those two departments conducting in-depth studies on their operations, spending, and staffing. Neither has had such a study in more than 15 years, the report says, noting that at least $17.6 million could be saved over 10 years through changes to make operations and staffing more efficient.
“The city should see this report as holistic and not pick and choose pieces of the report to implement or disregard,” the report says. “Support for the timebound police and fire levy is contingent on the city doing the work to implement the overall operational efficiencies related to its budget.”
The recommendations noted that commission members have different perspectives. Some believe a tax increase at this time is “neither prudent nor necessary.” Others believe that the proposed increase isn’t big enough to meet the city’s needs over the next decade.
The commission also recommends redeploying a portion of the city earnings tax dedicated to infrastructure. The sale of the Cincinnati Southern Railway to establish an infrastructure trust fund will eventually make the infrastructure tax unnecessary. The commission sees a $65 million gain in revenue for the general fund over the next decade from redeployment.
All told, the commission identifies $728.1 million in new revenue or savings that could be achieved over the next decade, enough to pay for investments to generate and accelerate growth and cover anticipated budget deficits. “In short, if the city and its elected and appointed leaders adopt the recommendations contained in this plan, the result will be transformational for Cincinnati and its citizens,” the report concludes.
In late June, just before City Council went on summer break, City Manager Sheryl Long delivered a verbal report on the feasibility of some of the recommendations and what has already been done or is in progress. The ticket-tax expansion, for example, has already been approved, and efforts are under way to generate more revenue from parking. But additional recommendations—leasing Lunken Airport, regionalizing the water works system, and sharing services among the parks and recreation departments, and others—are more complex, involve other governmental agencies, and will need further analysis, Long told Council. Her administration will continue to work with the business community on an implementation plan.
Pureval released a statement immediately following the report’s release, saying, “Given the critical challenges we face—like public safety, budgetary challenges, economic growth, housing, and the environment—ensuring our long-term vibrancy requires making complex and difficult decisions in the short term. While the report makes clear that this is a holistic set of recommendations, many of the individual items will require vetting, public engagement, and an eye toward our vision of equitable growth.” That, he said, “will take time.”
Cincinnati Futures Commission: Sources of Revenue or Cost Savings
Increase the city’s earnings tax from 1.8 percent to 1.95 percent, generating $357 million over the next 10 years.
Step up parking enforcement and add more parking meters to gain $10 million over 10 years.
Extend the city tax on sporting event and concert tickets to resold tickets. City Council passed such an ordinance in January. The commission says that will generate $11.7 million over 10 years.
Share more duties and services between the Cincinnati Parks department and the Cincinnati Recreation Commission to save $25 million over 10 years.
Expand an asset management agreement between Cincinnati Parks and Great Parks of Hamilton County for Mt. Airy Forest and French Park, saving $9.5 million.
Study divesting the Greater Cincinnati Water Works to an independent, public regional water authority.
Transfer the city’s pension system to the state of Ohio’s public employee pension system.
Consider selling or leasing the six city-owned golf courses.
Explore leasing city-owned Lunken Airport to the Cincinnati/Northern Kentucky International Airport.
Sell city-owned parking lots and other city-owned real estate, including the Burnet Avenue parcel where the Health Department headquarters now resides.
Pilot a gainsharing program to seek employee recommendations to save money and share the savings with them. Estimated savings: $10 million over 10 years.