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City administrators estimate cost of proposed tax increase to residents

By Sue Botos

Rocky River

While a 0.5-percent income tax increase makes its way to the November ballot, city administrators have made calculations concerning how deeply residents and those working in the city will need to reach into their pockets.

According to figures presented by Mayor Pam Bobst, based on a $50,000 salary, residents both living and working in the city would see $250 tacked onto their tax bill, as would those working in the city and living elsewhere. She said that due to an accompanying 0.5-percent adjustment in tax credit, residents working in another municipality will pay the same amount in city income tax as they do now. Any increase would depend upon the city in which they are employed.

For example, finance Director Mike Thomas explained that currently, a resident earning $50,000 and working in a municipality with a 1-percent income tax pays $500 to the city of employment. With Rocky River’s present 1.5-percent tax, this resident’s “before credit” city income tax is $750. Subtracting the $500 provided by the current 1-percent tax credit, the amount in Rocky River taxes equals $250. Added to the $500 paid to the city of employment, this resident’s income tax totals $750.

Under the proposed 2-percent income tax, this resident’s total would remain at $750; however, taxes before credit would amount to $1,000. Minus $750 in tax credit, the Rocky River total would still be $250.

“We should receive a significant revenue increase,” commented Thomas, despite the fact that most residents work in other cities. He added that many of the larger employers in the city, such as Giant Eagle and Home Depot, have many employees who live outside of the city.

City administrators hope that the amount raised will make up for the demise of the estate tax, which, according to information provided by Thomas, averaged more than $2 million yearly over a 10-year period.

This money, said Bobst, went entirely toward capital improvements, and she has stressed that any funds realized from the income tax hike will be used solely for this purpose.

Bobst indicated both during her state of the city address in April and at subsequent City Council meetings that the tax increase is a “last effort” in trying to offset the drying up of state revenue streams. The city has taken various belt tightening measures, resulting in the trimming of the general fund budget from $2,957,355 in 2012 to $2,840,200 this year. This reflects a reduction in equipment repair and purchases as well as other cuts.

These measures included $954,000 in savings through employee furlough days, a fire department raise delay and retirements. Although the Rocky River Municipal Court is self-sufficient, its operating fees are still listed under the city budget. Due to the establishment of a mayor’s court in North Olmsted and the accompanying reduction in case load, $200,000 in wages was cut from the court.

Additionally, both the police department and the Rocky River Wastewater Treatment Plant switched their employee schedules to 12-hour shifts instead of the traditional eight-hour days. Police Chief Kelly Stillman reported during the city budget hearings that the move has cut overtime from $23,000 to $12,000.

The revamp of the schedule at the wastewater treatment plant resulted in a savings of $75,000 since a licensed supervisor did not need to be replaced, according to supervisor Jeff Harrington.

Bobst reported that the Ohio Municipal League (OML), together with the city of Upper Arlington (near Columbus), recently sent a survey to all municipalities about the impact of state cuts on their general funds. “The OML wants to know what’s happening with the communities,” she stated. Results of the survey should be available by the end of the month.

 

 

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