After months of discussion about how to solve the city’s revenue woes, Reynoldsburg City Council members decided to table a proposal to raise the city’s income tax from 1.5 percent to 2 percent but left the door open to revisit a tax-credit reduction.
Council voted 6-1 at the Monday, July 21, finance committee session to designate the resolution for the income-tax increase, designed for the November ballot, as “other legislation.”
Councilwoman Leslie Kelly cast the only dissenting vote, saying revenue from the tax hike would have been reserved for capital improvements, which would give residents a good reason to vote for it.
“This is a different way to present a tax hike, and I would like to see it move forward,” she said.
Councilman Scott Barrett said although he had supported the income-tax resolution at the last committee meeting, “the more I thought about it, the more it didn’t sit right.”
“The fact is that revenue from the half-percent tax hike would be so minimal that I think we would be participating in kicking the can down the road,” he said. “I am also flipping my opinion because our timing is late, and it would be hard to get a sincere campaign going. I think we need to aggressively explore other options.”
Barrett said during a May finance committee meeting that a tax-credit reduction could be one of those options because voters have rejected the past four attempts to raise the city’s income-tax rate.
A 1-percentage-point income-tax hike failed in November. It would have raised the city’s income-tax rate from 1.5 percent to 2.5 percent and generated $5 million a year, according to City Auditor Richard Harris.
If the 0.5-percentage-point income-tax hike were pursued and approved, it would generate about $3 million a year, as would the tax-credit reduction, Harris said.
Barrett said the city’s roads are crumbling and the city doesn’t have enough revenue to make needed repairs.
“We owe it to our property owners to do our due diligence to protect their investments,” he said.
Councilman Cornelius McGrady III said he would be in favor of putting the tax-hike issue on the spring ballot instead, but “we have to look at a contingency plan if it fails again.”
“I’d like to look at a tax-credit reduction,” he said.
If approved by a council majority, such a reduction effectively would raise taxes without voter approval.
Council approved a 50-percent reduction in the city’s income-tax credit last July, but Mayor Brad McCloud vetoed it before it could go into effect.
The tax-credit reduction would have required residents who work outside the city to pay a 0.75-percent income tax – half of the city’s 1.5-percent rate – to Reynoldsburg, on top of whatever they pay to the city where they work.
Comparatively, a 0.5-percentage-point increase in the city’s income-tax rate would increase taxes for residents who work in Reynoldsburg or in any city with an income-tax rate lower than 2 percent. It also would affect residents who work in a township because townships do not collect income taxes, Harris said.
Councilman Barth Cotner said he was concerned about the timing.
“I’m OK with asking for a (0.5-percentage-point) tax hike, but the phone call I received today from a resident convinced me our timing is off,” he said. “That person asked me, ‘How many times do we have to say no to higher taxes before you get it?’ I worry about the timing in getting something passed this fall. I would rather see something on the spring ballot.”
Kelly said council might never have “a right time.”
“It is like the question when is the right time to have kids,” she said. “There is never a perfect time. … At some point, you have to take a leap. And as far as half-percent not bringing in enough revenue – if you have a child who is starving, you don’t say, ‘I won’t feed you because this level of food won’t fill you up.’”
Councilman Mel Clemens said, “I don’t think the city has the trust of the people at this time, and we would be wasting our time at the ballot. Like Scott, I would go for the 1-percent tax hike because we need the money. But I agree that we can’t do it this fall.”
The next full council meeting is scheduled for 7:30 p.m. July 28 at the Reynoldsburg Municipal Building, 7232 E. Main St.