Increases in withholdings taxes in communities like Stow are a good sign in a post-recession world, because that means more money is being paid to people working in Stow.
And that’s key because businesses, employees and cities are relying on each other in order to grow and recover.
“If you don’t have people working, they’re not going to have income taxes,” said Jack Kleinhenz, principal and chief economist of Kleinhenz & Associates in Cleveland and adjunct professor of economics at Case Western Reserve University’s Weatherhead School of Management. “They’re not going to be able to use retailers or services that are provided in the community.
“If you don’t have income taxes, or even the ability to pay for property taxes, you’re not going to have the revenues that governments need to operate,” Kleinhenz said. “It’s a critical path. The labor market is really the big concern in the current economic environment. The recovery is going to be determined on labor growth, income growth and obviously that spending that goes along with it.”
As such, business growth is important to an overall city’s growth.
“It’s financial wherewithal because we live basically from income tax,” said Mike Weddle, economic development director. “It impacts a community as a whole.”
Ronald M. Traub, economic development director for , said in the last several months he’s noticed or heard signs of commercial and industrial buildings for sale or lease along with help wanted signs — all signs of growth in the business sector.
Between 2009 and 2010, 163,000 square feet of open land was developed for purposes excluding residential in . Compare that to 2006 when 319,219 square feet of land was developed for retail, office, industrial, restaurant, institutional and recreation uses. Parry saw the recession hit with fewer city approved and even fewer completed projects. He’s thankful for the several projects now in the works to more than make up for the loss during the recession.
For every city, recovery and continued growth is predicated on retaining existing and attracting new businesses to the area — and with it skilled workforce and spin-off businesses.
“The important thing is (income tax revenues) do show a trend towards more employment and more salaries,” said Larry Finch, economic development director for . “More local wages means more local spending (and) that means more commercial activity for the gas station, for the supermarket, for the dentist, for everybody.”
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Editor’s Note: In this series, Patch gauges the recovery of 18 Ohio communities based on income tax receipts since the Great Recession. Find their individual stories Monday on Patch's Ohio news sites.