Published: Wednesday, 21 June 2017 13:22
By Cheryl Splain, KnoxPages.com Reporter
MOUNT VERNON — Members of City Council and the City Finance Group came away from a special council meeting Monday night united in their support of a ½ percent income tax increase as the best short-term way to address the city's dire financial situation. They also agreed that it is crucial to make sure residents know the importance of passing a tax increase in November.
“The details clearly demonstrate the need; nothing shown to us is pie-in-the-sky,” said Gordon Yance, finance group member and former president of First-Knox National Bank. “I'm almost appalled to see some of the information on the infrastructure. The local citizens have no idea.”
At its June 12 meeting, the finance group requested revenue amounts for three options:
Option 1: A ¼ percent income tax increase combined with a 5-mill property tax levy generates $2.9 million in 2018, rising to $3.2 million in 2022
Option 2: A ¼ percent income tax increase combined with a 6-mill property tax levy generates $3.1 million in 2018, rising to $3.46 million in 2022
Option 3: A ½ percent income tax increase generates $3.4 million in 2018, rising to $4 million in 2022
The idea behind the combined income tax increase and property tax options was to spread the burden across several demographic groups. Because the income tax is only on earned income, it adversely affects younger working families at a time they might be struggling. Seniors who have no earned income, but who use the majority of EMS services and share equally the fire/police and infrastructure services, would not pay the tax. Seniors would share the burden through a property tax.
Council President Bruce Hawkins said that his research shows that, by and large, combination school levies have failed. After discussing the options, both groups agreed the ½ percent increase is the option most likely to succeed with the voters.
“I think we would be naive to think the voters would go to vote and vote for two different issues that would take money out of their pocket,” said Councilman John Booth. Council members Nancy Vail and Janis Seavolt agreed.
“Currently, there is a large segment of our community that does not contribute to the upkeep of the city,” said Councilman Sam Barone. “That being said, I understand the risks of needing to choose something that will pass. I am fearful that if we fail in this endeavor, we're going to be in serious trouble come January.”
“It isn't about punishing or not punishing [a particular population demographic],” said Councilman John Francis. “It has to do with our decision with what we feel the voters will accept.”
Jeff Harris, president of the Area Development Foundation, after critiquing the current and previous councils for keeping the income tax flat since 1983 “to your own detriment” and accumulating so much deferred infrastructure maintenance, said that after looking at the numbers, option 3 is appropriate.
Marc Odenweller of the Community Foundation of Mount Vernon and Knox County also supported option 3, saying that a definite financial need has been demonstrated that must be addressed quickly.
The money generated by a ½ percent tax increase will be divided three ways:
*40 percent for roads and bridges
*40 percent to the general fund, principally for police and fire
*20 percent to capital improvements (buildings/equipment)
“It's not going for speculative, it's going toward maintaining what we have and [for] needed services,” said Barone.
A ½ percent tax increase is not nearly enough to address the infrastructure issue the city is facing. In a 10-year capital improvement budget, the finance group projected $94 million worth of infrastructure needs. “We're in a catastrophic area right now if the voters don't put something on,” said Francis. “Nobody looks at infrastructure because they can't see it.”
Financial advisor Susan Sukys said that the goal of the finance group was to look at sustainable options longer term, not just next year, and that the group tried to bring creativity and other solutions to the table. “If you're looking at loss of manufacturing jobs, earned income can't be the sole [revenue source],” she said.
Vail and Barone agreed that, long-term, council has to find other ways to raise revenue. One revenue stream, a sales tax, ties in with the issue of being a charter city versus statutory city.
Law Director Rob Broeren will prepare legislation for Monday's council meeting approving a ½ percent income tax increase for November's ballot. Mayor Richard Mavis said a public hearing will be held between council's June and July meetings. He plans to ask council to pass the legislation as an emergency at the July 24 council meeting. Ballot language has to be submitted to the Knox County Board of Elections by Aug. 9.