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Cleveland Heights Income Taxes Rebounding

Officials attribute recovery to RITA, relationship to nearby cities

Income tax revenue in Cleveland Heights has been down the past few years but is starting to rise.

As of June 30, income tax revenue was about $12.2 million, higher than other yearly collections since 2008. City officials are budgeting for income tax revenue of $21 million by the end of the year.

“I’ve seen an improvement this year in income tax collections through the first half of the year,” finance director Tom Raguz said. “Now the main thing going forward is, can we keep it up. Last year was the lowest year that the city has had in the last several years in income tax collections.”

And since 2008, income taxes have been on a decline. Total income tax revenue for the past four years has been:

  • $21.4 million in 2008
  • $20 million in 2009
  • $20.4 million in 2010
  • $19.2 million in 2011.


Raguz attributes last year’s decline — and this year’s increase — to the , a statewide organization that collects income taxes. It takes time to get on the collection cycle, Raguz said, but the agency also has more resources available to recoup collections.

“We made a ,” Cleveland Heights Mayor Ed Kelley said. “Not only do we as far as the cost, not having any employees in the city doing it, but (it) also benefitted us by collecting more money for us.”

More income tax is good news for Cleveland Heights, as the collections make up about half the city’s roughly $40 million general operating fund.

“It’s not the whole story, but it’s an indicator of the local economy and the local finances of the city,” Raguz said.  

The city has a 2 percent income tax rate with up to a 0.5 percent credit for residents who work outside city limits. Of last year’s collections, which Raguz said has pretty much stayed the same the last several years, 63 percent came from individuals who work outside Cleveland Heights.

Kelley said over the years University Circle has been an economic engine for the city. There are a wealth of jobs at Cleveland Clinic, University Hospitals, Case Western Reserve University and other nonprofits. Those workers translate into customers and residents who have supported, if not directly, city income taxes.

“A lot of these people end up buying their home or renting in Cleveland Heights or spending their time having dinner or shopping in Cleveland Heights,” Kelley said. “We’re famous for our restaurants. Most, if not all our restaurants, are owned and operated by families. We don’t have a lot of Applebee’s and Bob Evans and things of that nature.”

The city doesn’t have any land zoned for manufacturing. Kelley said Cleveland Heights also doesn’t have the air quality and traffic concerns that accompany manufacturing plants, including the city’s dependence on one employer for a majority of income tax revenue.

But that doesn't mean city officials haven’t made some tough cuts over the past few years. Even before the recession, income tax revenue was flat. Kelley said they knew a downturn was coming, so the city eliminated some positions, left others unfilled and made employees take furlough days for a year.

Today, Kelley said the city is slightly ahead but still has a long way to go.

“We have to stabilize the foreclosure market,” Kelley said. “We have to develop new sources of income tax revenue. We have to continue to make sure our police and fire have the best equipment and best staffing to deliver the best fire and safety forces in the state of Ohio. Our residents deserve that, and they won’t settle for anything less.”

Editor’s Note: In this series, Patch gauges the recovery of 18 Ohio communities based on income tax receipts since the Great Recession. Read about

Garry Kanter August 27, 2012 at 02:30 PM
CH has an 11% housing vacancy rate, and the mayor "wants a shovel in the ground" on a 71 unit apartment building at Lee & Meadowbrook that will require a $3 million taxpayer subsidy. That $3 million is just for the tax abatement that the developers are insisting on. There's a great chance the city will give their "partners" the land to build on, as well. And there's been no independent market appraisal on the 5 parcels that make up the site. So, great! The city's tax collections have crept up slightly! Except they're going to give that away, and a whole lot more, if this ill-conceived taxpayer give-away isn't stopped.
Garry Kanter August 27, 2012 at 02:35 PM
I wonder how many tax collectors the city laid off when they switched to RITA?
Tifanny Barnes August 28, 2012 at 03:41 AM
Ed Kelley's statement in the last paragraph does not pass muster. No matter how much equipment and how many police we have it will not compensate for the danger he has placed the city in through his bad decisions. His refusal to talk with Metroparks or Trust for Public Land when they optioned Oakwood has resulted in the emptying of Severance Center and the construction of a Superwalmart. Would Cleveland Heights be better off with Oakwood as a Metropark? He also closed Denison Pool, eliminating jobs for teens and a place for all the disadvantaged kids who live in that part of town. He can't control the crime or disorder he has invited into our city, no matter how many police he hires. I feel for the police and the mess he created for them to deal with.
Michelle Simakis (Editor) August 28, 2012 at 09:54 AM
The city eliminated 12 jobs, and some of the employees were moved to other departments. There's more info in the previous articles we link to in the site and listed to the right hand side of the page if you want a bit more info on the move to RITA.
Garry Kanter August 28, 2012 at 12:36 PM
Thanks, Michelle. The third link in the article was the ticket! But, as usual, their numbers are all over the place. And raise as many questions as they answer. "According to City Finance Director Thomas Malone, the cost for collecting income taxes in 2010 was $1,216,000, resulting in additional revenues of more than $20 million. "The budgeted amount for tax collection in 2011 is $1,114,000. But in 2012, with R.I.T.A. providing the collection functions, the cost to the City is projected to be $621,000, a savings of $493,000 over 2011. "The city eliminated 12 jobs with the closing of its income tax collection department. Some of these individuals have been hired by the Cleveland Heights to work in other departments. Others are either retiring or seeking to secure new employment elsewhere." Who knew we had a 12 person department dedicated to collecting taxes? If anybody is interested, I'll highlight the weirdness that jumps out at me..
Emily Jones August 28, 2012 at 11:15 PM
Tifanny Barnes *doubt that is your real name*, Oakwood has nothing to do with this article. The improved Cleveland Heights Income tax collection is a good sign that our local economy is seeing improvements. As for using our taxes to support our safety forces, of course this is a good expense. Trying to attach the legal sale of a private golf course to a developer by blaming CH Mayor who had nothing to do with it is very strange. Clearly, you have a personal agenda that blurs your perspective.

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