Marysville City Council President John Gore said he and other city officials are "shocked" by a last-minute decision by the Scotts Miracle-Gro Co. to publicly oppose the city income-tax hike on the May 4 primary ballot.

Marysville City Council President John Gore said he and other city officials are "shocked" by a last-minute decision by the Scotts Miracle-Gro Co. to publicly oppose the city income-tax hike on the May 4 primary ballot.

The city is seeking an income-tax increase from the current 1 percent to 1.5 percent to help fund projects including a new police station, a second fire station and a new municipal court facility. City officials say remaining revenues from the tax increase would help pay for city services including snow removal and street paving. If approved, the issue would generate an additional $4.1-million annually for the city.

Scotts Miracle-Gro, the city's largest employer with more than 1,000 associates working at the Scottslawn Drive campus, has initiated a campaign against the levy, days before voters go to the polls.

The move leaves Marysville Mayor Chris Schmenk in an unenviable position. Having personally lobbied for city council to place the issue on the ballot, Schmenk now finds her private-sector employer opposing her on the issue. Schmenk serves as vice president for external affairs for Scotts Miracle-Gro.

In an open letter to Marysville residents, Scotts chairman and chief executive officer Jim Hagedorn stated two reasons for the move -- bad timing from an economic standpoint, and the fact that Scotts has asked Marysville leaders to exempt some of the company's executive earnings from the income-tax increase.

"The proposed and permanent 50 percent increase in the city's income tax is the wrong decision for Marysville, especially when we're just seeing the beginning of an economic recovery," Hagedorn states in the letter. He continues later in the letter: "I also want to be transparent in saying about 200 of our associates -- including me -- receive equity-based compensation as part of our pay. ... Other Ohio cities have exempted this type of pay from local income tax in order to encourage companies to continue investing in growth and help them attract world-class talent, both of which add new jobs to the local economy. We have asked Marysville to consider the same since Scotts Miracle-Gro is the only employer in Marysville to use this type of risk-based compensation."

Gore said he was surprised by Hagedorn's announcement.

"We have always valued our partnership with the Scotts Miracle-Gro Company," Gore said. "Dating back to their beginning in 1868, Scotts has played a positive role in the growth, health and safety in our community to make Marysville what it is today. We look forward to a continued partnership. However, we are shocked by a recent move by Scotts to reverse the support they showed Marysville in November for the proposed one half of a percent (0.5 percent) income-tax increase."

Gore said Scotts is "a significant user of city resources," with more than 28 police calls and 52 fire/EMS runs to its facilities in the past 15 months.

"Scotts employees directly benefit from the services paid for by city income taxes," Gore said.

Gore said city officials wonder why Scotts is withdrawing its support for the tax issue.

"The need has not changed," Gore said. "The economy is improving. The only plausible explanation for Scotts' reversal is their insistence to have a special tax credit granted for stock-option bonuses received by their executives," Gore said. "Last year alone, 49 Scotts executives cashed in $22.1-million in these bonuses, for which they paid $221,000 in city taxes. Scotts would like us to provide a credit so these executives would not have had to pay city taxes on the $22.1-million in stock-option bonuses they received."

In his open letter, Hagedorn stated that if approved, the income-tax increase would affect all of Scotts' employees, not just executives receiving risk-based compensation.

"Whether this exception is made or not does not matter. The ballot initiative would affect all of our associates, not just the highest paid," Hagedorn states in the letter.

He goes on to state that Scotts looks forward to continuing in Marysville.

"Whether the tax increase passes or fails, this is our home," Hagedorn stated in the letter. "As a global company, we could be incorporated anywhere. But we love it here. And we look forward to continue planting the seeds for our future growth right here in Marysville, where our tremendous story took root 142 years ago and counting."

Gore said he received an initial inquiry from Scotts last October, and that he also met with Hagedorn in February. In a letter from Gore to Hagedorn, obtained by ThisWeek and dated April 26, Gore stated his intentions to appoint an ad hoc committee to review stock options along with Marysville's entire tax code.

"I also advised Ms. (Ann) Aquillo (Scotts director of government affairs) that I intended on having a representative of (Scotts) on the committee, as well as representatives from other employers in the city, a CPA, a city council member, a private citizen, a senior citizen and our city law director," Gore stated in the letter.

Gore concluded that letter with this statement: "My commitment to you today after having served on city council for 11 years, and having over three years left on my term, is that if this is not good enough for you and if I do not keep my word on this, then I will tender my resignation."

Gore said the city has done its research and found that neither Columbus nor Cleveland offers this type of tax credit.

"Other central Ohio cities don't offer a credit," he said. "The federal and state governments do not offer a credit. The city simply has not found a justification for exempting this type of bonus from the income tax. To do so would only benefit a small number of executives to the detriment of the community as a whole."

Hagedorn also stated that while other companies have had trouble dealing with the economy, Scotts has continued to contribute to Marysville in recent years.

"Over the past two years, as other local companies were forced to cut back, we continued to invest in our home town," Hagedorn's letter states. "We recently increased our manufacturing capacity and, just last week, dedicated a new office building on our campus. All along, we have added more jobs and helped to strengthen the Marysville economy."

Gore said the city can't justify providing a special tax credit for the Scotts executives when a decision recently was made not to offer a credit to the city's 3,500 commuters.

"The city would have had to ask for a larger increase in the income tax and place a larger burden on the rest of its hard-working citizens," Gore said.

He said the proposed municipal income-tax increase represents an investment in the community.

"The proposed solution includes an investment to bring our safety services -- police, fire/EMS and municipal court -- to the levels needed to protect our families and our homes and businesses," Gore said. "This income-tax plan will allow the city to restore basic city services that protect quality of life and property values."