By Cheryl Splain, KnoxPages.com Reporter
MOUNT VERNON — At a public forum on Tuesday night, city officials had the chance to make their case for a ½ percent income tax levy that's on the Nov. 7 ballot.
Auditor Terry Scott, Mayor Richard Mavis and Councilman Sam Barone answered questions from a panel of media representatives from KnoxPages.com, WNZR/Mount Vernon Nazarene University, the Mount Vernon News and WMVO/WQIO.
Scott began by reviewing cuts in local government funds over the past six to eight years, the city's 53 different funds and how only the general fund is under council's control. The general fund covers 15 city departments; 66 percent of the general fund staff is fire and safety forces. The last income tax was enacted 34 years ago. Scott said that passing the ½ percent income tax is essential “if we are going to maintain safety forces and maintenance.”
Mavis said the city considered a property tax vs an income tax but rejected it because the millage required to generate the $3.5 million needed would be over 6 mills. “There's no one going to vote for a 6-mill property tax; that's not reality,” said Scott.
Regarding residents who live in the city but work elsewhere and pay taxes where they work being required to pay the income tax, Mavis said that if they live here, they enjoy the city's parks and safety forces. He also said those residents still receive a 1 percent credit on income earned outside the city.
Barone addressed the flip side, noting that some residents who don't reside in the city but work in the city will pay the tax. “They may live somewhere else, but their livelihood is directly connected to this community, so it matters that the bridges they cross are sound and secure and it matters about the safety forces,” he said. He pointed out that the tax is on earned income only, not Social Security, pensions or disability income.
Responding to a question about the effect of Siemens' downsizing, Scott said it amounts to about a $600,000 annual reduction in revenue. Regarding cutting expenditures in light of an anticipated $1.2 million budget shortfall in 2017, he said payroll accounts were fully funded but other accounts received less than what was spent in 2016. He projects the actual shortfall to be closer to $250,000 to $300,000.
Barone cited abandoning the plan to add three more firefighters to help cover fire/EMS in Liberty Township, continued deferred maintenance, no major brick street projects for several years and positions left unfilled as things the city did to cut expenditures. “A lot has been done, and I think there's been a lot of economy on the part of a lot of people,” he said. “Now we have to dip into TIF funds and we'll have to repay that with interest.”
TIF (tax increment financing) funds are dedicated for specific purposes. For example, the Coshocton Avenue TIF fund is designated for Coshocton Avenue projects; likewise with the Central Business District and Sandusky Street TIFs.
Scott said the city will have to borrow as much as $300,000 from TIF funds at the end of the year. As with any loan, council must approve the loan, complete with amortization schedules and interest calculations. The general fund will repay the TIF funds.
As to how passing the tax levy will help the city's shortfall, Scott said that the city has been subsidizing the police and fire budgets for many years. The current ½ percent income tax generates $3.5 million a year; with another $3.5 million from a new tax, the $7 million will mostly cover the safety-service budgets.
Barone said safety is the single most important responsibility of local government. “We could cut virtually everything else we do in the general fund and we would still not have enough to cover the shortfall with fire and EMS,” he said. “Businesses have many choices where to locate. Nobody in their right mind will invest in a city that doesn't invest in itself. City government doesn't create jobs, but it can create an environment that is conducive to companies locating here.”
According to numbers from Fire Chief Chad Christopher, EMS billing and township contracts cover 72 percent of the fire/EMS budget. Responding to a question about how the city claims to be struggling to fund the fire department in light of Christopher's numbers, Scott said that the chief's numbers don't include everything. “Health insurance for their employees is not in the fire department budget, it's in the general fund,” he said. “That's $700,000 to $800,000 every year for health insurance.” Other costs such as Medicare tax aren't included either. Scott said those costs add more to the department's $5 million operating budget.
Barone said that if the additional ½ percent generates too much money, the money is still restricted to safety services. “If there is any surplus, which is highly unlikely, we have the ability to put that into a building or equipment fund [for use later]. That's highly unlikely; the needs are abundant,” he said.
He said that as funding is available, the city will look to add the three firefighters for Liberty Township, fill one police department position and one long-empty street department position. “There is no appetite on the part of council to expand,” he said.
Regarding the plan if voters reject the additional ½ percent tax, Mavis said that's been discussed internally, but he declined to give specifics. “Clearly it will curtail what we do,” he said, “but if you're talking about laying off people, that's not high on our priorities.”
Left to right, City Auditor Terry Scott, Mayor Richard Mavis, and Councilman Sam Barone at Tuesday's night's forum to explain the need for the 1/2% income tax hike which the voters will decide November 7th. - KP Photo