- Published: Wednesday, 19 July 2017 20:36
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MOUNT VERNON - Below are introductory comments made by City Council Finance Committee Chair Sam Barone at Wednesday's meeting on the proposed one-half percent increase in the city income tax rate. This statement lays out why, in Barone's opinion, the tax should be earmarked for police, fire and emergency services.
"Council, we are meeting here tonight to consider an amended version of Resolution 2017-52, which seeks to place on the November ballot a request for a one-half percent increase in the City income tax rate, and for which I will request a suspension of the rules to approve at next Monday’s legislative session. Council, if you will indulge me for just a few minutes, I would like to recap for all, including the audience with us in chambers and those viewing the session by electronic means, the road we have traveled to this meeting of the Finance Committee.
Serious consideration about asking voters to approve additional operating revenue began at year-end 2016, when lower than anticipated profits were reported by major businesses in our community. The resulting shortfall in 2016 tax receipts, and the prospect of continued diminished tax collections in 2017, had a profound and sobering impact on our appropriations process last January.
In fact, as we consider this time-sensitive legislation tonight, the City’s administrative team is confronted with a $1.2 million budget deficit that must be dealt with by the end of the calendar year. Most likely we will be forced to borrow from our own segregated TIFF district reserves sufficient funds to meet the City’s current obligations, and we will need to repay this loan with interest.
While the chickens have come home to roost sooner than expected, the fact is all of us knew they were on the way. It was never a matter of if, but rather when, they would arrive. Speaking as a member of this Council for the past five and one-half years, I have witnessed a valiant effort by Mavor Mavis, former Safety Service Director Dave Glass and current Safety Service Director Joel Daniels, our City Auditor Terry Scott, and every one of our City Department Heads, to stretch available revenues to the limit in a concerted effort to shield City taxpayers from an increase.
But with each passing year it became painfully clear that the one-half percent increase voters approved in 1983 to fully fund, and guarantee, police, fire and emergency medical services, was falling farther and farther short of meeting the expenses of those vital services. Council had no choice but to subsidize safety services from its General Fund, at great expense to every other City department.
Sadly the brunt of this financial burden, more than $3 million this fiscal year, has been borne by our capital replacement and improvement program, which has become alarmingly anemic. Whereas this Council, even five years ago, had the opportunity to prioritize and authorize several capital projects, be they related to equipment replacement, surface water management, or road and bridge repair, this year there were precious few dollars remaining to address a growing list of deferred maintenance items, let alone capital projects that are essential to keeping our city attractive to job-creators and prospective tax-paying residents.
Policies pursued by the Ohio Legislature to cut state income tax rates have been enacted at the expense local government entities throughout the state, including, of course, the City of Mount Vernon which has experienced collective losses of up to $1 million per year as a result of legislators’ abolition of the estate tax, personal property tax, and the majority of local revenue sharing funds, which represented a significant portion of our city’s revenues.
In anticipation of looming budget shortfalls, but well before the full impact of reduced business income tax revenue was known, the Mayor engaged a blue ribbon panel of local businessmen and businesswomen to take a deep dive into the City’s financial condition. Meeting for the first time in the fall of 2016, the City Finance Study Group began analyzing the City’s revenue cycle, dating back to the last income tax increase in 1983 – 34 years ago. Their mission was to advise Administration and this Council on appropriate measures to re-balance the City’s expenditures with available and potential new tax revenues.
The Study Group, together with members of this Council, and a host of elected and non-elected officials, pored over City budgets past and present, as well as projected budgets going out as far as the year 2020. Equally important was the attention given to the City’s equipment, facility, and critical infrastructure needs estimated to cost up to $90 million over this same timeframe. It was the unanimous conclusion of these private citizen businessmen and women that the City’s needs are real, and that without an enhancement of revenues, the prospects for preserving the quality of life we expect today, and for building the community we want for tomorrow, would be bleak.
After vigorous discussion about the relative merits of income tax vs. property tax increases, it was the consensus view of the Committee, Administration, and Council Representatives, that a modest increase in the City’s income tax rate, aligning our rate with those of many surrounding municipalities would be the most effective path toward solvency. It was also the path that would shield those living solely on pensions, social security, or investment income from any additional tax burden, since the tax is levied only on earned income.
That issue having been resolved, it remained for Council and Administration to determine, if and how, additional projected revenue of a little over $3 million per year should earmarked. The resolution given its first reading at Council’s June meeting would have allocated the new funds 40% to roads and bridges, 20% to Equipment and other Capital needs, and 40% to the general fund, with the majority of the general fund’s portion presumably covering (a portion of) the annual subsidy to safety services.
That brings us to last week’s public hearing on the resolution, at which Council heard loudly and clearly from those speaking that more clarity and certainty was needed concerning expenditure of the new revenues for voters to embrace the ballot issue. Importantly, the ranking chair of this committee, Mrs. Vail, also raised the possibility of pledging 10 percent each from the general fund’s 40 percent share to the fire and police departments. To some Council members, including myself, though the idea of pledging some funds to safety service had merit, the proposed percentages were inadequate for our current safety service needs, and introduced a complexity to the distribution formula that threatened to confuse the voting public.
Responding to what we heard at last week’s illuminating public hearing, the Mayor, Auditor, Safety Service Director, and I, as Chair of Council’s Finance Committee, met to identify a more direct and understandable path forward. We had in mind the following two goals:
1. Restore to fire, police and ems services the guaranteed funding source for the vast majority of their needs, which they had in 1983 at the time of the last income tax increase; and
2. Free the City’s general fund from the burden of subsidizing safety services, enabling the City to once again undertake critical capital projects, which have languished in this environment of increased costs and diminished revenues.
It is our considered opinion that by dedicating 100% of the proposed new revenue stream from a one-half percent income tax (to police, fire and emergency services) that we can accomplish these two important goals.
Most importantly, we can make a strong, simple and direct case to our electorate that our most important service needs – police, fire and emergency medical services – will have the financial resources they require."
Council will take a vote on whether to place the issue before the voters this November when they meet next Monday, July 24th at 7:30 p.m. at City Hall. All council meetings are open to the public.