Economic indicators show county weathering tough financial times

Credit: Nick Graham

Credit: Nick Graham

Skyrocketing inflation and gas prices and other pandemic after effects concern officials in Butler County, but they say economic indicators here point to a strong economy that can weather the storm.

The Journal-News examined 17 indicators going back to 2007 when the last Great Recession rocked the U.S. economy — and almost toppled the county’s finances — and all show growth. Sales tax is the county’s largest revenue source, allowing the county to provide various services to residents, has increased 78.6% since the economy hit bottom in 2009 soaring to $52.7 million last year.

The county has collected $17.8 million in the first quarter of this year and year-to-date the county’s sales tax collections are up 8.1% or $1.3 million. Butler County Administrator Judi Boyko said while the economic indicators have been very positive and the county’s finances are healthy right now, she has her eye trained on what’s happening globally.

“Defining what services to fund and what your revenue sources is to fund them can’t be done in a bubble, it has to be done looking at what’s going on in the greater economy,” Boyko said. “Especially when your primary revenue sources is generated by people’s willingness and confidence to spend.”

Numerous gas stations in the region raised their prices by more than 30 cents to $4.78 last week and many experts say they could top $5 a gallon soon. The inflation rate was 8.3% as of April.

Bill Even, an adjunct economics professor from Miami University, said “everything looking across the board looks pretty good” but those numbers predate the current dismal situation.

“Food prices and gas prices have been hit especially hard by inflation and there are no sales taxes on those items so to the extent people are having to shift more of their money into those categories then that’s going to hurt sales tax revenue,” Even said.

He said Butler County is faring a bit better than the rest of the state in sales tax collections, between 2019 before the pandemic descended and 2020 the state’s sales tax collections went up 16% but Butler County’s take increased by 18%.

Other government revenues see big jumps

Cities rely largely on earnings tax to provide services to their residents and those collections have increased 50.8% to $137.3 million in the county’s six cities and three townships that have joint economic development districts. The two biggest cities also saw increases year-to-date, Hamilton’s revenues are $1.78 million higher and Middletown’s is up $1.4 million.

Hamilton City Manager Joshua Smith said city council set a goal a decade ago making job creation a top priority. He said it hasn’t been easy given the city doesn’t have vast acres of open space to develop, so they have gotten creative, repurposing existing space, like the massive new Spooky Nook sports and convention complex.

“As we build out our strategic plan on an annual basis the thing that we are always thinking about is what is going to help either bring new jobs in or retain the jobs we already have,” Smith said. “A lot of that is creative placemaking, employers today are different than employers 30 or 40 years ago, they expect restaurants, entertainment opportunities, they want park space available to them. So as we try to improve the community, everything we are trying to accomplish is about creating jobs.”

Some numbers don’t give the whole picture

Commissioner Don Dixon said part of the reason sales tax stayed strong — early on the county predicted a 30% drop — during the pandemic is the federal government gave out thousands of dollars in individual COVID-19 relief money and everyone was home without anything to do, so they shopped online.

He said everything looks rosy now but it won’t last.

“All this is coming down to kind of a perfect storm, who knows how this thing is going to turn out, one thing is for sure we’ve been through the best I think,” Dixon said. “They were COVID years, so much money thrown at it, so much money out there... All that’s coming back into focus now, it may take a couple years but it’s starting to head that direction. I don’t see a massive retraction of the economy but there’s going to be a correction.”

Even said many economists are saying another recession is “likely” because the federal government is now raising interest rates and “their great challenge is to raise them just enough to kind of dampen the inflationary fires without sending the economy into recession.”

County Treasurer Nancy Nix said because “due to the federal government senselessly heaping trillions of dollars into the recovering COVID economy, county offices are certainly feeling the harmful inflationary effects on everything we purchase. In addition, it’s incredibly hard to find workers.”

The county is presently trying to replace its finance director, human resources director and has numerous other job openings. Nix said a few years ago when she had job openings she’d get 200 applications now 20 is the norm, “I keep asking — where are all the workers.” County offices are budgeting for higher salaries trying to retain workers and attract new “we know personnel-wise we are facing strong headwinds.”

Even said he expects the measures taken to arrest inflation will also to slow the construction of new housing.

New home building permits in the county totaled 826 in 2007, just before following the housing crisis that tipped the country into the Great Recession, bottomed out at 301 in 2011 and hit a new high of 727 last year. The median sales price was $165,500 in 2007 and had increased to $239,000 last year.

Greg Berling, a real estate developer and executive committee member at the Home Builders Association of Greater Cincinnati, said he expects the rates to go up in the 6% range this year. He said millennials are still house hunting and Butler County is one of the favorite locations because of the excellent schools and other amenities.

“It’s still a good target market it’s still a place people want to move,” Berling said. “Like every cycle, it does end, there is a correction, during the Great Recession we didn’t think it ever would end, at least while we were in the moment but it did. This is not the same. We’re definitely more cautious in the short term but all my projects are multi-year projects.”

Other indicators tied to the housing market are property conveyance taxes which rose from $5.4 million in 2019 to $8.27 million last year. Deeds jumped from 12,559 in 2020 to 15,559. Property taxes hit an all time high year at $564 million.

Higher economic indicators not always good

There are other economic indicators no one wants to see spike like the unemployment rate, bankruptcies, foreclosures and food stamps. The county’s unemployment rate went from 3.8% pre-pandemic, to 7.2% when everything was shut down in 2020, and last year it was back down to 4.5% compared to the state where it went from 4.2% in 2019 to 5.2%.

Bankruptcies climbed to 1,931 in 2009 but have steadily down-trended since to 557 last year and stood at 187 as of the end of May. Because of federal pandemic rules and funding the numbers for foreclosures and food stamps are off.

Foreclosures reached 3,166 in 2010, dropped to 699 in 2019 and there were only 267 last year. But the federal government place a moratorium on them during the height of the pandemic.

Food stamp numbers exploded 138% to $113.1 million last year, up from $47.5 million in 2018. The huge jump was due to supplemental benefits that gave recipients about $120 more per month.

Dixon said despite the fact everything has been turned upside down due to the pandemic and its after effects, the county is well prepared to weather the storm, “it’s not going to be as bad as it was the last time.”

“We’ve right-sized, we’re in the best financial shape we’ve been in, we’ve done the first real estate tax cuts that have ever been done in Butler County, we’ve reduced some levies,” he said. “We’re pretty lean.”

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