Gahanna City Council has approved a contingency plan to raise additional funds should a proposed income-tax rate increase on the May 7 ballot fail.
During a special meeting April 5, council approved legislation that would reduce its income-tax credit if voters reject Issue 12. The issue proposes an income-tax rate increase from 1.5% to 2.5% and an increase in the tax credit from 83.33% to 100% for those who pay municipal taxes elsewhere.
The seven-member council unanimously approved legislation April 5 stating the city would provide a 50% credit applied to the lesser of the tax paid to another municipality or the tax imposed by the city for the period beginning July 1 and ending Dec. 31.
As of Jan. 1, 2020, no credit would be allowed for income taxes paid or withheld by an employer for payment to another municipality.
This legislation would be nullified by Issue 12's passage.
The legislation details how proceeds collected from a tax-credit reduction and eventual elimination would be spent.
For example, 55% would be dedicated for the purposes of capital improvements and equipment for infrastructure, public safety, municipal facilities or parks and recreation, maintenance and repair of the same and paying debt service for such purposes.
The other 45% would be dedicated for the purposes of funding operations for public safety, municipal safety, municipal services or parks and recreation.
Councilman Brian Larick said the change to a 50% credit for six months would generate roughly $2 million.
If no credit is given, it's estimated to generate about $8 million annually, he said.
Larick said the credit wouldn't go to zero if Issue 12 passes.
He said council postponed voting on the reduction of the tax credit April 1, because of concern in regard to dedication of the funds.
"Those dedications are 55% for capital and 45% for operations into an operations fund dedicated to public service/public safety and parks-and-recreation operational activities," Larick said. "We want to be cognizant we don't set aside more funds than appropriate that can only be used for capital. We want to be careful not to overaccumulate in a dedicated fund.
"The additional funds that this language, if in effect, collects is roughly $8 million, (close to what) Issue 12 would collect. So we had to reduce a number from 75% to 55% dedicated to capital so that amount, in real dollars, is essentially the same as what Issue 12 could have, not above and beyond."
He said the other 45% is essentially the remainder of that dedication going to the operational fund for public safety/public service and parks-and-recreation operations.
If approved, Issue 12 is estimated to generate about $9 million annually once it's fully implemented and assuming 100% compliance, said Councilman Michael Schnetzer.
Schnetzer said the city has spent reserves, cut spending and maxed out its credit card.
"This council made the decision last year to go to the voters to ask for more revenue, which is what virtually every other community in Franklin County has done to address challenges faced in the past decade and decade and a half," he said. "With the failure of Issue 29, some cuts were put forward and the citizens recoiled."
Schnetzer said the easy cuts have been made, and the police force has been reduced by 10 percent through attrition in the past decade.
"Clearly, there is no appetite for cuts in this community, even though that's what's necessary," he said.
Schnetzer said the question is if the city is going to have a Christmas.
"With this legislation, there will be Christmas," he said. "The only question is who's going to fund. Will it be the residents who work outside the city or will the voters approve Issue 12 and stop $4 million from leaving the city that's paid by nonresident workers. Essentially the choice is up to the voters on May 7. That's why I feel it's critical to pass this now so there is no question what the outcome will be."
Councilwoman Karen Angelou said she and her colleagues are in a no-win situation, no matter what they do.
She said council wants to be truthful about the consequences of the ballot measure's outcome.
"We wouldn't ask for money if isn't necessary," she said. "That's against my ethics."
Angelou said Gahanna needs additional funds for the city to grow and remain "a shining star."
"I know the only way to do that is pass Issue 12," Angelou said.
She said it has been 42 years since the last increase.
If Issue 12 passes, 75% of the revenue generated from the increase would be dedicated for capital improvements and equipment for infrastructure, public safety, municipal facilities or parks and recreation, to include but not be limited to streets, buildings, parks facilities, trails and playground elements, maintenance and repair of the equipment and paying debt service for such purposes.
The other 25% would fund operations for public safety, public service or parks and recreation, to include but not be limited to police protection, 911 emergency services, snow removal, streetlight and traffic-signal maintenance and recreation programs.
Gahanna resident Greg Saul asked council to delay the vote regarding the tax credit, saying it would be clear after the election what measures need to be taken.
Council president Brian Metzbower said the situation, personally, makes him sick to his stomach.
"We're in a Catch-22," he said. "If we do something after the election, it will be 'we didn't know.' It's a double-edged sword."
He said council can't keep "kicking the can down the road" in terms of its financial situation.
"We can't chicken out," he said. "The voters do deserve to know."