A panel of Upper Arlington residents charged with reviewing the city's finance strategies will recommend the local income tax rate be increased to 2.5 percent.

A panel of Upper Arlington residents charged with reviewing the city's finance strategies will recommend the local income tax rate be increased to 2.5 percent.

After meeting for six months, the Citizens Financial Review Task Force will present a 26-page report to Upper Arlington City Council at a June 5 meeting slated for 7:30 p.m. at the UA Municipal Services Center, 3600 Tremont Road.

Among items the council-appointed task force is expected to share is a recommendation that the city raise its income tax from 2 percent to 2.5 percent.

The move, the task force said, would generate an additional $3.5 million in annual revenues.

According to Capital University Law School Dean Rich Simpson, who chaired the 13-member task force, an income tax increase would put Upper Arlington in line with several neighboring communities, including Columbus.

He added it wouldn't affect most residents, because many work outside Upper Arlington and pay income taxes to other municipalities.

Meanwhile, he said, the added revenue from an income tax increase would provide funding for the city to address $113 million in street, stormwater and other infrastructure projects that have been identified as needed over the next 10 years.

"There is an enormous need for capital improvements in the city," Simpson said. "The task force believes those are prudent and needed capital improvements.

"Without those improvements, the city will not continue to be the kind of community we all want to live in. Without additional funding, the task force believes it won't be possible for the city to fund those capital improvements."

According to Upper Arlington Assistant Finance Director Brent Lewis, the state of Ohio first authorized cities and villages to collect income taxes in 1946.

Upper Arlington established its first income tax at 1 percent in December 1968.

The local income tax rate was raised to 1.5 percent in November 1975, Lewis said, but the last increase was in June 1983, when it was raised to 2 percent.

In order for the rate to be increased again, it would have to be approved by Upper Arlington voters, if council agrees to place the issue on the local ballot.

Simpson said the task force agreed with city officials who, in recent years, have said a new funding source must be identified to overcome the loss of Ohio's estate tax, which was eliminated in Jan. 1, 2013, and continued cuts to the Local Government Fund

In December 2013, Upper Arlington Finance Department officials told ThisWeek Upper Arlington News the city had received an average of $4.8 million in estate taxes, and its share of the Local Government Fund decreased from about $2.5 million in 2007, to roughly $1 million in 2012.

"We don't think that gap can be closed absent additional funding sources," Simpson said.

While other strategies, such as a police or fire levy, could help offset the largest chunk of Upper Arlington's operating budget, Simpson said an income tax increase is preferred because its revenue can be applied to capital improvements.

"It will have no impact on most of our residents," he said. "Our big need right now is infrastructure and capital improvements."

Simpson said the report to be presented to council June 5 also will recommend city officials consider increasing fees for various services so they are better aligned with the city's costs of providing those services.

He added the task force will recommend expanding shared-services partnerships such as those the city already has through agreements to maintain vehicle fleets for Grandview Heights and Norwich Township.