Macedonia — City Council approved "unconventional" legislation that would repair roads and fund the recreation center by increasing the city’s income tax rate by 0.5 percent, while allowing an income tax credit for residents.
The plan, submitted by Councilor Kevin Bilkie, "will not raise taxes on the residents of Macedonia," he said.
Council voted Jan. 26 to return to the ballot in May with a proposal to raise the city’s income tax rate by 0.5 percent, while allowing an income tax credit for residents in which they would not have to pay anything above a 2.0 rate.
"Those residents wouldn't be affected" by the income tax increase, Bilkie said. "They'd apply for the money and get it back."
The city's income tax rate currently is 2.0 percent. When a 0.25 percent income tax that has been earmarked for the recreation center expires at the end of June, the city's income tax rate would drop to 1.75 percent. If approved by voters, the 0.5 percent income tax increase would raise the city's income tax rate to 2.25 percent, Finance Director Rhonda Hall said.
Voting in favor of Bilkie's proposal were Bilkie and Councilors Nick Molnar and Jan Tulley, while voting against the plan were Councilors Sylvia Hanneken and David Engle.
Bilkie believes his plan would raise about an additional $2 million a year. About half of the money raised would go toward road paving and maintenance, about one-fourth of the money raised would go toward funding the recreation center and the rest of the money raised would go toward paying the income tax refund to residents plus a contribution to the general fund.
The deadline for applying for the refund will be July 1 of the year following the one in which the tax must be paid.
Mayor Joe Migliorini said he likes Bilkie’s plan.
"I like the tax credit aspect of this because it doesn't affect the residents," he said, adding he believes "it works" and it "makes sense."
Bilkie said the increase, if approved, would be permanent. He called his proposal "unconventional, but it has been done."
The income tax burden would be placed on businesses and non-residents who work in Macedonia, city officials said.
"The more cities that go above us" in income tax rate, "the less money we get because the residents that work elsewhere are going to be paying those cities and not us," Finance Director Rhonda Hall said.
Molnar said he believes the money for road improvements is a must.
"Our roads suck," he said.
Hanneken claimed the proposed increase is "unjustified and unsubstantiated." She said she believes Council needs more time to discuss the city's options rather than rushing another tax issue onto the ballot.
She said she could not support a 2.25 percent income tax because she said she is concerned about how it would affect local businesses.
Bilkie responded that because of where the city is located, near the Ohio Turnpike, Route 271 and Interstate 480, "you're always at a risk of having businesses leaving. Especially with the nature of the surrounding area, you have to run that risk, no matter what."
Engle said if the city is "going to seriously look at an income tax increase, we need to look at a serious attempt to cut our operating costs."
Hanneken added, "Or at least keep them from increasing as much as they are."
Engle said the city needs to consider cutting its budget.
"In the past, it has been a very unpleasant situation, but we have had to tell department heads, 'You need to cut your budget,'" he said, adding "a reasonable cut in appropriations" is needed.
Migliorini said he believes action is needed. He said the city is in "an alarming situation."
"If we don't increase our income tax rate and we go down to 1.75 percent, we're giving our money away to all the other communities," he said. "We can't survive without these increases.
"This will get us up to where we should be on our roads," he said. "That will give us better maintenance, so roads won't deteriorate as quickly. I don't believe it is going to effectively hurt our business community. I hate having to put it on the back of businesses, but the sources of revenue are limited where we can bring in dollars to this community. We need to look at the realization of what our neighbors are doing. Everybody is fighting for the same dollars."
Migliorini said he has reviewed the plan with Finance Director Rhonda Hall, adding, "It's a reasonable way of collecting money and spending it."
Police Chief Jon Golden told city officials at a special Jan. 24 finance committee meeting that for the last 15 years, finance directors have told City Council members that they need to increase revenue for the city.
"That can was kicked down the road by every Council since then," he said. "Here we are today, having to address issues way beyond where they should have been because every Council wanted to do what was best to get them elected. How convenient it is to say, 'Let's put the burden on the employees again. Let's not tax the residents, but let's put it back on the employees.' I've got guys who do a great job and we're understaffed. And now you want me to cut staff."
Golden said the only way to cut a significant amount from the budget "is to lay off people," adding a portion of Council "doesn't want to address the issue that's there. It's getting ridiculous. We're left with lousy vehicles and poor equipment."
The legislation must be submitted to the Summit County Board of Elections by Feb. 1 at 4 p.m. to appear on the May 2 election ballot.
The city's income tax rate currently is 2.0 percent. When a 0.25 percent income tax that has been earmarked for the recreation center expires in July, the city's income tax rate would drop to 1.75 percent. If approved by voters, the 0.5 percent income tax increase would raise the city's income tax rate to 2.25 percent, Hall said.
The two tax issues that were defeated in the November general election, according to the Summit County Board of Elections, were:
• Issue 18, a 10-year, 0.25 percent income tax increase for roads, lost 3,774 votes against to 2,774 votes for.
• Issue 19, a 20-year, 0.25 percent income tax renewal for recreation, was defeated 3,386 votes against to 3,206 votes for.
Mike Lesko: 330-541-9432
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