Study Shows Remote Working Here to Stay, Will Have ‘Significant Impacts’ on Cities
October 26, 2021
COLUMBUS, OH – The Ohio Mayors Alliance, a bipartisan coalition of mayors in Ohio’s largest cities, released the findings of a report that estimates the impacts of remote working on municipal tax revenue. The study shows that remote working, or work-from-home (WFH), will continue after the pandemic and that it will have ‘significant impacts’ on the fiscal health of cities across Ohio.
“Ohio’s economy is only as strong as the health and vibrancy of our cities and local communities,” said Keary McCarthy, Executive Director of the Ohio Mayors Alliance. “Working from home isn’t a bad thing, but it does have unintended consequences that will affect cities, downtown businesses, and local economic development strategies.”
The report estimates that 33 percent of the workforce could work from home based on economic data in a cross section of 10 Ohio cities. The resulting fiscal impacts vary by city, but range between a loss of 6 and 17 percent of municipal income tax revenue within a city’s general fund.
“As this report confirms, remote working will have lasting impacts on local communities,” said McCarthy. “While we are not currently seeking a state legislative solution, we do intend to work with state leaders to closely monitor these trends and the fiscal impacts on our cities.”
A breakdown of the budgetary impacts by city is included below. It shows a range of potential impacts from high to low, with most cities potentially seeing general fund revenue losses of more than 10 percent. Dayton is expected to see the highest loss at 17 percent, while other cities like Fairfield (15 percent) and Elyria (14 percent) could also see significant budgetary reductions. Cities like Akron, Toledo and Columbus have additional exposure above these levels because they should also expect lower income tax revenues in places outside the general fund.
The report also states that the results provide a “very conservative” analysis of the overall impact that WFH will have on Ohio’s cities. This is because the report focuses solely on the loss of municipal income tax revenue paid by residents and non-residents. It does not address potential losses in the portion of the municipal income tax generated by business net-profit withholdings, nor does it account for potential follow-on effects such as less spending on goods and services in downtown business districts, an increase in office vacancy rates and decreasing property values, all of which impact parts of the local economy and employee earnings.
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Summary of Likely Impacts of WFH on Income Tax Collections by Ohio Cities as Percent of Tax Collections (General Fund Only) |
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|
City |
High |
Medium |
Low |
|
Akron |
7% |
4% |
3% |
|
Cincinnati |
12% |
7% |
5% |
|
Columbus |
12% |
7% |
4% |
|
Dayton |
17% |
10% |
6% |
|
Elyria |
14% |
9% |
6% |
|
Fairfield |
15% |
9% |
6% |
|
Kettering |
12% |
7% |
5% |
|
Springfield |
10% |
6% |
4% |
|
Strongsville |
6% |
4% |
3% |
|
Toledo |
6% |
3% |
2% |
The report was conducted by PFM, a financial management consultant, and included an assessment of national WFH trends and interviews with Ohio employer associations. It also estimated fiscal impacts of a sampling of member cities in the Ohio Mayors Alliance. The report notes that there is still a great deal of uncertainty around WFH, but that many employers will implement some form of hybrid staffing where employees work some days in the office and some at home.
The Ohio Mayors Alliance is a bipartisan coalition of mayors in Ohio’s largest cities. For more information, please visit: www.OhioMayorsAlliance.org.
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