Lakewood OH

City to host informational community meeting regarding income tax issue

By Sue Botos

Rocky River

The loss of about $3 million in state support and millions more in U.S. Environmental Protection Agency (EPA) mandates have resulted in the need for a 0.5-percentage point increase in municipal income tax, according to city officials.

In an effort to further explain the necessity of this measure, which will appear on the November ballot as Issue 58, and to address residents’ concerns, Mayor Pam Bobst has announced there will be a community meeting at 7 p.m. Oct. 22 at the Don Umerley Civic Center.

A letter sent to all residents and signed by Bobst, council President Jim Moran and finance Director Mike Thomas stated that, in response to

recommendations from the city administration, in July council passed legislation calling for the income tax increase to be placed before voters. If passed it will also raise the credit given to residents paying local taxes to other communities by 0.5 percentage point.

The measure will up the current 1.5-percent tax rate, last increased in 1977, to 2 percent. According to a 2012 income tax survey, this is the average rate for municipalities throughout the county.

Accompanied by financial information, the letter explains that since the 2008 recession, the city has reduced its general fund from $25,331,598 to this year’s total of $19,261,844, representing a decrease of more than $6 million, or 24 percent. Additionally, during the past five years, 24 full-time positions were eliminated and part-time employees worked 71,246 fewer hours. Mandatory nonunion employee furlough days in 2012 accounted for a 4.6-percent wage reduction.

Aside from salary cuts, union contracts and health care have been renegotiated, cooperative purchasing agreements made and grant dollars have been utilized. The street paving fund, which was $1,443,837 in 2008, was completely cut in 2011, and stood at $20,805 last year.

The belt tightening has come in the wake of an approximately $3 million cut in funding due to the state’s abolishment of tangible personal property tax, kilowatt hour tax and estate tax. Plus, the U.S. EPA had mandated that the city invest an estimated $70 to $80 million to upgrade its aging sewer infrastructure to prevent residential flooding and overflows into Lake Erie.

Bobst has stated at prior City Council meetings that a resident earning $50,000 annually will pay an additional $250 per year, or $21 monthly, should the tax issue be approved. This will raise about $2.1 million each year, an amount that will be used only for capital improvements and equipment purchases.

Information provided by the city states that the tax will be imposed on income consisting of wages, salaries and similar compensations as well as business net profits. Much of local income tax is collected through employer payroll withholding for individuals working in the city. Social Security, pensions, interest earnings and dividend payments are tax-exempt.

While administrators are hopeful about the issue’s passage, they are not assuming the money will be there. At last week’s council committee session, Bobst announced that the first draft of the 2014 city budget is being composed; however, it will not reflect the tax increase.

“It would be premature of us to do that,” Bobst stated. She again stressed that any increase would affect only capital improvements. “We’re going ahead (with the budget) like the measure did not pass,” she said.

Since 2008, officials have been able to make cuts with little impact on city services. However, should the Issue 58 be rejected by voters, they warn that this will no longer be the case. “We will have a balanced budget, and I don’t think the residents will be happy with the outcome,” Councilman at Large Dave Furry recently commented.

According to information provided by the city, an additional $2 million will need to be trimmed from the 2014 budget as well as future financial statements. In her statement to residents, Bobst said, “These cuts will be made as strategically as possible with a focus on minimizing the impact on residents, but clearly after the significant cuts that have already been made, there is little doubt that these cuts will be felt.”




RSS Syndication