When it comes time to pass a budget, Blue Ash has money in the bank

Cincinnati’s first-ring suburbs face unique challenges. Changing demographics, economic stability, and issues regarding resources and security are common threads among these jurisdictions. 

The ways the 49 Hamilton County cities, villages, townships, and municipal corporations not only adjust but thrive is the focus of this series, First Suburbs—Beyond Borders. The series explores the diversity and ingenuity of these longstanding suburban communities, highlighting issues that demand collective thought and action to galvanize their revitalization.

The arrival of fall not only brings cooler weather, but for the cities and villages across Ohio, it means time to start setting their annual budgets. The city budget process is often routine, and based on whatever was done the year before. But budgeting is, arguably, the most important work that elected and appointed officials do, as they decide how to deploy your tax dollars in the communities you live and work in.

Public safety, police and fire departments parks, streets, sidewalks, trash pickup, recreation, and the town’s management itself, are funded through the public budget.  It’s not a stretch to say a community’s quality of life can hinge on how the municipality’s leadership spends the revenue it collects every year.

For a lot of older, first-ring suburbs, the budget exercise can be a yearly challenge in paying for essential services with a stagnant, even declining tax base.  A nationwide study by a Brookings Institution expert found that two-thirds of the people living in thousands of small towns and villages it studied in the Midwest were in communities experiencing fiscal stress.

While Hamilton County has its share of towns navigating sluggish tax bases, the city of Blue Ash is not one of them. Blue Ash currently enjoys a surplus of nearly $60 million, a sort of savings account or rainy day fund that has grown over the years as its revenue annually exceeds its spending by healthy margins. Its surplus now amounts to two-thirds of its $89 million annual operating budget, making for a very comfortable cushion in the unlikely event that Blue Ash falls into a financial emergency.

“It's just happened over a period of 15 years or more mostly by just under spending and being careful about our budgeting,” says Mayor Jill Cole. “We conservatively budget, and then normally exceed the expectations.”

A major job center
The mayor’s explanation makes it sound simple. And on one level, city budgeting is no more complicated than a basic family budget – spend less than you make, and save the rest. But Blue Ash is blessed with favorable trends in key factors that many first suburbs struggle with. Its population is on the upswing, having grown by 10% since 2010 to 13,410 today.  Even more importantly, Blue Ash is a job center, as the population of people who work in the city is about three times larger than its resident population, at between 35,000 and 40,000. Since its tax on earnings provides about 70% of its revenue, Blue Ash enjoys a steady and healthy inflow of tax dollars.

The city is home to about 2,500 businesses, including some that are very large and some that are growing fast. It’s biggest employer is Ethicon Endo-Surgery, a subsidiary of Johnson & Johnson that manufactures medical devices. It employs about 1,400 in Blue Ash. The second largest is Kroger Co., which maintains an office for its technology and digital employees there.

The city is business friendly, and interstate access, attractive houses, and developable land have made it an attractive place to launch, locate and grow a business. One of the region’s largest private companies, human resources outsourcing firm Sheakley, agreed in May to move its headquarters to Blue Ash, planning to lease space that is now undergoing $1 million in renovations. Blue Ash City Council agreed to a $200,000 loan to make the move possible, an amount that will be forgiven if the company creates $9.6 million in taxable payroll annually in the city.

A growing population and a robust workforce make for a healthy balance sheet year after year. But other management practices have helped Blue Ash stay solidly in the black, Cole says.  That’s primarily its philosophy of borrowing. “When we issue debt for major projects, we do so with 10-year bonds versus most jurisdictions that issue 20- to 30-year bonds,” she says. “This allows us to not only save interest, but more importantly, stay ahead of replacement and repair curves.”

The city-built and owned Cooper Creek event center, for example, is now debt free, she says. “We can now decide how and when to update it without the burden of servicing past debt.”

The city’s budget surplus has grown so large that at least one city council member has proposed giving some of it back to the taxpayers. Council Member Jeff Capell has proposed sending every Blue Ash resident $100, a proposal that would cost about $1 million. The idea went nowhere, but Capell says he’d like to see more discussion about what to do with the hefty reserve.

Cole says Blue Ash shares many of the same challenges as less-fortunate and older first suburbs: lack of new land, need to engage in expensive redevelopment of existing inventory, aging infrastructure, and aging houses. But it remains committed to spend on capital projects that either have a direct economic benefit or contribute to the overall desirability of Blue Ash.

For example, the city is in the midst of a complete overhaul of its Towne Square, a $9 million project that, when finished, will include a large civic lawn, a walk-through veteran’s memorial, a retail promenade lined with pocket play areas, a stage that can be used as a communal space, and a dog park.

First suburb budget problems
Unfortunately, the kind of robust finances that Blue Ash enjoys is not shared by all of the 49 cities, towns and villages throughout Hamilton County.  Golf Manor, for example, population 3,700, is forecasting that it will need to spend a little more than it will collect in 2025, and will need to draw down on its reserves to make up the difference. The village of St. Bernard is forecasting it will barely make ends meet, as it expects to stay in the black by just over $300,000 on a budget of $15.6 million next year.


Tom Carroll, a former city manager of Silverton, studied the first-suburbs phenomenon and wrote a detailed report on the economic factors affecting them for the International City/County Management Association. “The biggest challenge for your classic first suburb is that the tax base is built out and isn't growing,” he says. Most of the towns were primarily built as residential communities, but the houses are now 75 to 100 years old, and as many higher-income families move to the outer suburbs, the older homes can fall into disrepair.

A lack of available land makes increasing the tax base difficult, while expenses for police and fire protection, as well as other basic services, continue to go up. About 10 years ago, local governments were dealt a financial blow when then-Gov. John Kasich cut the local government fund in half. That was money that the state would send back to the cities. “It was crushing," Carroll says. At around the same time, the state legislature also repealed the estate tax, another source of revenue for local governments. “It was a double whammy,” Carroll says.

If you’re not Blue Ash – or other well-heeled first suburbs like Madeira, Mariemont, or Wyoming – what can be done?

The 'revitalization' budget
Carroll, who was also city manager in Loveland and is now manager in Lexington, Va., says the solutions involve “intervention.”   Focusing on improving the housing stock through incentives for property maintenance, code enforcement, and looking for opportunities to begin infill development in vacant or underutilized lots. He suggests cities acquire abandoned or declining properties, such as old churches or declining strip centers, and work to redevelop them into 21st century amenities that will spur people to move back in to the communities.

“Can the city take a church, or an old school, or a strip center or a Kmart and actually acquire it and drive up its property value that way?” he says. “Somehow it has to control and intervene in the marketplace.”

Carroll recommends that cities create a “revitalization” budget, in addition to their standard operating and capital budgets. Extending the family budget comparison, it would be like putting money in a vacation budget or a kitchen remodeling fund. This third budget is “a vital step for modest first suburbs to create the financial discipline and awareness that is necessary to reverse decline,” he says.

In Silverton, a job creation and revitalization fund was carved out using one-time or unexpected revenues that are deposited in that fund and used to reinvest in the community. Silverton, a 125-year-old community that saw its population decline through the ‘90s and early 2000s, reversed that decline and saw residential growth from 2010 to 2020. “Having a revitalization budget forces local government leaders to be intentional about setting aside resources for future community vitality,” he writes, and “forces first suburban leaders to think beyond today and to take the long view.” 

In Blue Ash, with a budget reserve of $57 million, there’s plenty of money to fund new projects. But in many of the county’s older cities and villages, Carroll says, funding revitalization will take “transformational change, adaptation, and innovation in the face of declining resources.”

The First Suburbs—Beyond Borders series is made possible with support from a coalition of stakeholders including the Murray & Agnes Seasongood Good Government Foundation - The Seasongood Foundation is devoted to the cause of good local government; Hamilton County Planning Partnership; plus First Suburbs Consortium of Southwest Ohio, an association of elected and appointed officials representing older suburban communities in Hamilton County, Ohio.


 
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Read more articles by David Holthaus.

David Holthaus is an award-winning journalist and a Cincinnati native. When not writing or editing, he's likely to be bicycling, hiking, reading, or watching classic movies.