By Cheryl Splain, KnoxPages.com Reporter
MOUNT VERNON — The discussion on how to solve the city's financial crunch took a new direction on Monday when it was suggested to raise the money through a combination income tax increase and property tax increase. Previous discussions centered on raising the income tax by ½ percent and how the additional revenue would be divided among roads/bridges, capital improvements, police/fire and the general fund.
The new proposal involves a suggested ¼ percent income tax increase for safety services and a 5- or 6-mill property tax for roads and bridges. The idea behind a combined revenue stream centers on the desire to avoid placing a larger burden on one demographic population over another.
Compared to seniors, an income tax places a larger burden on younger working families, the demographic the city wants to attract,. Seniors do not pay income tax but still use city services; however, they face restricted cost of living increases and rising medical expenses compared to the younger population. A combined approach, with perhaps some sort of means testing on the taxes, spreads the responsibility over a broader demographic area.
The city finance group and city council will hold a joint working session on Tuesday, June 20, at 6:30 p.m. to further explore the combined approach. A ¼ percent tax increase generates around $1.68 million. City Auditor Terry Scott will calculate what 1 mill generates and the millage required to produce the revenue needed.
Another option discussed at Monday's finance group meeting is to dedicate the revenue from the proposed ½ percent tax increase to safety services, which would free up money for the general fund. Although a current ½ percent income tax is dedicated to police and fire, it no longer generates enough to cover the police and fire budgets. For fire/EMS, the tax covers 57.45 percent of the 2017 budget; for police, the tax covers 53.32 percent. The city's general fund subsidizes the remaining amounts.
Much of the meeting dealt with the need for a new building to house the police department, municipal court, a new magistrate court and the city law director's office. In 10 years, although the parking garage at 5 N. Gay St. can be enlarged to include an additional floor, the structure on top of the garage will be unusable, necessitating construction of a new building at a cost of $10 million to $15 million. Finance group members urged city officials to carefully consider whether current vacant buildings can be used rather than building a new structure.
Regardless of where the courts, police department and law director's office ultimately move to, Scott said the city should set aside $400,000 a year to help offset the cost of the new building. A similar approach was used to construct the fire station on West Gambier Street. The city set aside money beginning in 1993; by the time the station was constructed in 2003, the city could pay cash for the building.
City council has to make a decision soon on how it wants to proceed. The deadline for placing an issue on the November ballot is Aug. 9. With its reduced summer schedule, council meets on June 26 and July 24; council will either have to pass legislation authorizing a ballot issue as an emergency or call a special council meeting to include a third reading.