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Cleveland: General Business & Economic News

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I was playing around with the mayor's budget estimate for 2019 and noticed that receipts from income tax were $314.8 million in 2016 and are estimated to be $424.9 million for 2019.

 

Assuming the rate of taxation was 2.25% in 2016 and 2.5% in 2019, that means the taxable income in Cleveland will have increased by slightly over $3 billion in three years. Typically the projected receipts have been  underestimated, so $3 billion increase is a conservative estimate.

 

I would say that extra $3 billion is very visible around town. 

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That's a pretty strong indicator of increased population, increased employment, increased incomes or possibly all three.

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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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25 minutes ago, KJP said:

That's a pretty strong indicator of increased population, increased employment, increased incomes or possibly all three.

 

Of course, Clevelanders aren't the only ones paying the city's income tax. Given the almost static population numbers, I'd say the growth reliably indicates new hiring as well as higher-paying jobs replacing lower-paying ones. It's also probably fair to say people moving into town are making more than the people moving out.  In any case, it's all good news; but I'm not sure it's an indicator of population growth.

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56 minutes ago, Dougal said:

I was playing around with the mayor's budget estimate for 2019 and noticed that receipts from income tax were $314.8 million in 2016 and are estimated to be $424.9 million for 2019.

 

Assuming the rate of taxation was 2.25% in 2016 and 2.5% in 2019, that means the taxable income in Cleveland will have increased by slightly over $3 billion in three years. Typically the projected receipts have been  underestimated, so $3 billion increase is a conservative estimate.

 

I would say that extra $3 billion is very visible around town. 

I believe that Cleveland's tax rate was 2.0% in 2016. 

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4 minutes ago, Dougal said:

Ouch ... that would cut the increase by more than half.

 

Not quite. It also increased the credit to 100% up to 2.5%, so if you live in Cleveland and work elsewhere your Cleveland taxes probably went down. It's hard to tell how much of a difference that makes overall since most of the income tax money comes from non-residents so the credit wouldn't be relevant to them.

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There's also a good amount of units coming off of the 15 year tax abatement on projects from the early to mid-2000's that are paying more taxes now. That trend will only continue for the foreseeable future. 

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1 hour ago, Mendo said:

 

Not quite. It also increased the credit to 100% up to 2.5%, so if you live in Cleveland and work elsewhere your Cleveland taxes probably went down. It's hard to tell how much of a difference that makes overall since most of the income tax money comes from non-residents so the credit wouldn't be relevant to them.

 

So it's probably fair to say income went up by $1.5 billion, still a sizable number in terms of disposable income. 

 

 

34 minutes ago, w28th said:

There's also a good amount of units coming off of the 15 year tax abatement on projects from the early to mid-2000's that are paying more taxes now. That trend will only continue for the foreseeable future. 

 

True; but I was only looking at income taxes, not property taxes.

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On 9/5/2019 at 11:55 AM, Dougal said:

I was playing around with the mayor's budget estimate for 2019 and noticed that receipts from income tax were $314.8 million in 2016 and are estimated to be $424.9 million for 2019.

 

Assuming the rate of taxation was 2.25% in 2016 and 2.5% in 2019, that means the taxable income in Cleveland will have increased by slightly over $3 billion in three years. Typically the projected receipts have been  underestimated, so $3 billion increase is a conservative estimate.

 

I would say that extra $3 billion is very visible around town. 

 

@Dougal Do you have a link to the 2019 income tax revenue estimates? They would provide some interesting background for an article I'm writing in my head.


"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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2 minutes ago, KJP said:

 

@Dougal Do you have a link to the 2019 income tax revenue estimates? They would provide some interesting background for an article I'm writing in my head.

 

With pleasure.  Based on revenue gains, that last tax increase probably wasn't actually needed. I always say if you want more taxes, get more taxpayers. 😮

 

http://www.city.cleveland.oh.us/sites/default/files/forms_publications/2019MayorsEstimate.pdf

 

 

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Where do you see 2016 income tax receipts @Dougal? I see that 2017 receipts were $389,045,794.

 

EDIT: Never mind, I found it on Page 81 (or 87 if the title pages are included). Thanks!  

Edited by KJP

"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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A California fintech company opens its R&D office here. 1st US outpost outside of its base in California. Also has offices in Toronto and Melbourne.

 

Silicon Valley fintech firm Nomis Solutions opens R&D facility in Beachwood

 

"Silicon Valley's Nomis Solutions has planted a flag in Northeast Ohio with a new R&D facility it's now running in Beachwood.

 

Nomis, founded in 2004 and based in San Bruno, Calif., bills itself as an "innovative fintech company focused on ensuring on-going value creation for the world's smartest financial institutions." It uses big data to provide pricing advisory services to financial services clients via mathematical models that are used by banks to optimally price rates for deposits and loans....."

 

https://www.crainscleveland.com/technology/silicon-valley-fintech-firm-nomis-solutions-opens-rd-facility-beachwood

 

 

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^  "The share of downtown's workforce that lives in Cleveland ticked down in 2017 too"

 

Since both jobs and housing increased, all this says is that jobs grew faster than housing.

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^yeah, it alone doesn't mean much. I could mean, as you said, the number of jobs downtown grew faster than did housing in the city. It also could mean that despite more downtown employment,  those that work there continue to move to the burbs and those that are living downtown either work at home (which is not counted by his data source) or work outside of downtown, such as in Univ Circle or outside the city.

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^ Or it could mean that most of those still unemployed in Cleveland are (I hate to say this) unemployable in a traditional sense.  We will need programs such as we provide for the physically disabled to deal with the last 4%.

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4 hours ago, Dougal said:

^  "The share of downtown's workforce that lives in Cleveland ticked down in 2017 too"

 

Since both jobs and housing increased, all this says is that jobs grew faster than housing.

 

Sounds plausible. There's been maybe a 1000 units (or less) between 2017 and 2018. There's more than that under construction now.

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The data being used in this analysis is slightly incorrect right now. It comes from LEHD data that recent added 2016 and 2017, but does not include federal workers for those two years. So data for 2016 and 2017 should probably not be included.

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FWIW, the BLS preliminary employment data is out for August 2019.

 

https://www.bls.gov/eag/eag.oh_cleveland_msa.htm

 

Total employment for Greater Cleveland grew 1.2% YOY and reached 1,092.1, the highest employment has been since Dec. 2001. At current growth rates, employment would surpass the 30-year peak (1147.9 in Dec. 1999) in about 18-24 months.

 

The big employment sector continues to be Construction, which grew at 7.1%

Next biggest was Business and Professional Services, at 4.3%

Third was Education and Health Services, at a steady 2.2%

 

 

Edited by KJP
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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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Cool. Buy 'em and move downtown! 😄


"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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1 hour ago, Terdolph said:

I have been saying this since the 1980's.  It was NAFTA that killed Cleveland.

 

Probably has more to do with Cleveland's high illiteracy rate. True story....

 

And I didn't realize Cleveland had died. When its population drops to a Rome-in-The-Dark-Ages of 20,000 to 30,000, then I'll agree with you. 

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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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2 hours ago, PittsburgoDelendaEst said:

You've been saying since the 1980's that a trade agreement that was signed in 1992 and went into effect in 1994 killed Cleveland?

 

chris pratt oh snap GIF

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Wrong thread 

Edited by KJP

"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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Another example of a successful Cleveland company, bought out by greedy outsiders who destroy the company. Home Team Marketing shut down on Sept 25 after 18 years in business.  I think all the schools and non-profits that were cheated out their money should band together in a class action and sue Steve O'Neill personally.

 

https://www.crainscleveland.com/sports-business/fallout-home-team-marketing-closing-runs-deep

 

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Hi. S-W locked out while I was typing this, so thought it fits here. Written with regard to S-W specifically, but I think the education point broadly works in this thread:

 

Does anyone know what type of talent S-W would be looking for that we don’t have here? I looked up the best chemistry and inorganic chemistry programs in the country, and they’re scattered throughout the Ivy Leagues, Cal Ivies, and Midwest.

 

In addition to chemists, I’d assume Sherwin would need all the back office functions at HQ—accounting, HR, comms, etc. For these types of roles, it doesn’t really matter if you’re nearby a school because the talent pool is humongous and skill agnostic (I.e., you can be in HR at S-W as easily as you could be in HR at Bacardi).

 

Therefore, from a talent perspective, none of the sun belt cities beat Cleveland. On top of that, as I’ve referenced before—we’re surrounded by RPM, Ferro, Akzo, BASF, PPG, etc. from which to poach talent. Austin and Charlotte have what? Bank of America and Tito’s?

 

We’re talking a lot about airports. And ya. It’s a PITA to fly to second tier cities or internationally from Cle due to layovers. But honestly, if you’re flying that often—the hub probably wouldn’t help anyway, because you’re flying to your plants in rural Germany, or Chongqing, or wherever where you’d still need layovers even from CLT. Also, you have an AmEx Platinum, a United Explorer, a Delta Sky, a Chase Sapphire, etc.—and you’re spending your time taking meetings in lounges—just as you would if we were still a hub (shoutout if I was working next to you at ATL today). 
 

To me, the bigger cost (or opportunity) for the company is the talent base. And I haven’t seen an argument against Cle on that front. 

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As we all learned these numbers can drastically change but nonetheless they are positive all around from employment (staying over 1mil and up 10,000 YOY)  to total jobs (over 1.4% or 15,000 added). One surprising number is the jobs added in the professional sector. August showed an increase of 7,000 jobs and the preliminary for September shows an increase of 9,000 jobs (5.7%). Does anyone have any idea where this massive increase would be stemming from?

 

https://www.bls.gov/regions/midwest/oh_cleveland_msa.htm

 

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43 minutes ago, jimphilpat1 said:

This my first time putting my two sense in.  I was born in Cleveland at 26th and payne, but moved away in my latter part of grade school. Came back and work in Cleveland  for couple times.  It seems that over the past 40 years there has been quite a few 500. Companies have left Cleveland for so called greener pasture. So I am not sure and hope SW stays in Cleveland. When are they supposed to give their big announcement?

 

 

Only two Fortune 500 companies got up and left Cleveland in the last 50 years. Most mid-size cities have lost Fortune 500 companies due to consolidations since the 1980s. Cleveland is no different. 

 

Discussing what companies have left Cleveland or were absorbed out of existence is only half of the equation. Let's also consider who has been added to Cleveland. Here are the top companies in Cleveland. How many of these firms didn't exist or weren't large enough yet to be in the Fortune 1000 50 years ago?

 

https://www.zippia.com/company/best-biggest-companies-in-cleveland-oh/

Edited by KJP
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"Life is 10% what happens to you and 90% how you respond." -- Coach Lou Holtz

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