Tallmadge’s record income tax collections grabs state, national attention

By Paula Schleis
Beacon Journal staff writer

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TALLMADGE: The city is enjoying its highest income tax collection in memory and began the year with the highest unencumbered balance it has ever known — things that are turning the Summit County city of 17,500 into a state poster child for collaboration and efficiency.

A city administrator has been invited to give a presentation of their efforts to a March meeting of the American Planning Association in Atlanta, and Gov. John Kasich’s office has been citing Tallmadge in interviews and reports.

From collaborating with Brimfield Township to create a joint economic development district (JEDD), to merging its dispatch system with Stow, to handing its building department tasks over to the county, “we were doing collaborations even before the recession hit,” Mayor David Kline said. “We were ahead of the curve.”

In 2013, the city collected more than $9.6 million in income tax, Finance Director Steve Shanafelt said. That exceeded the 2012 record by almost $1 million.

By comparison, the city collected $8 million in 2008 when the Great Recession was beginning, dropping to $7.1 million in the following year.

“It’s probably safe to say that $9.6 million is an all-time high,” Shanafelt said.

Economic Development Director Dennis Loughry said the Brimfield JEDD gets a lot of the credit.

The state created such districts as a way of stopping annexation battles. They allow cities and townships to team up on new development. The township gets a share of income tax, which it is not permitted to collect outside of a JEDD, and the city benefits from raising taxes on a portion of township land.

Loughry noted that because Brimfield provides street, fire and police services to the JEDD, the city gets full benefit of its half of the income tax levied in the JEDD.

“It lets the economic development arm of the city grow without impacting services and residential property,” Loughry said.

There has also been plenty of growth inside the city limits. Because Tallmadge is the second oldest community in the county, it attracts quite a few medical (and well-paying) jobs, Loughry said. The city has also added restaurants and retail in recent years, and has seen some existing businesses expand.

The growth in income tax — last year’s collection was almost $1 million more than expected — has added to a record-breaking unencumbered balance.

The city started this year with $6.4 million that has no obligations attached to it. That’s up from $4.7 million in 2012.

Kline said growth in that line item can be traced to before the recession, when former Mayor Chris Grimm “started the ball rolling.” That included creating a joint emergency dispatch district with Stow and getting rid of the tax department in favor of using the Regional Income Tax Agency. Later, the city eliminated its building department and handed those duties over to Summit County.

Those moves alone account for $1 million a year in savings, Kline said.

The recession motivated communities to do even more. There were internal cuts and department mergings, and Tallmadge has been an eager partner in a group of Northeast Ohio mayors and city managers who meet regularly to talk about ways to share equipment or combine purchase orders to save money.

“There are those of us who have been able to benefit from that and become wiser as far as working with others,” Shanafelt said.

The efforts have been timely, especially since the state has been working to pull funds away from municipal governments.

When Ohio eliminated its estate tax last year, Tallmadge stood to lose half a million dollars annually. The city has not yet felt the impact of that cut because some estates were still being processed under the old tax.

“That will dwindle this year,” Shanafelt said.

Also, the state has cut about half of the $1 million a year in local government funds Tallmadge formerly received. While there have been some attempts to restore that money, Shanafelt said he thinks it is unlikely to happen.

Loughry added that Tallmadge might also be looking better than some of its neighbors because the city doesn’t rely on one or two large employers.

“Our community is made up of many small- to mid-size businesses, so we don’t fluctuate too much either way,” he said.

And because many of the businesses are manufacturers, they were the first hit by the recession and the first to recover, he said.

“It made sense that they would rebound first, so as a city, we rebounded quicker than most,” Loughry said.

Paula Schleis can be reached at 330-996-3741 or pschleis@thebeaconjournal.com. Follow her on Twitter at http://twitter.com/paulaschleis.

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