Powell income-tax measure: Approval would benefit residents in multiple ways, city leaders say
Having one of the area’s lowest income-tax rates isn’t the boon for residents that it might seem on the surface, Powell city officials say.
A restructuring of the city’s income tax is needed, according to City Council, which has placed an issue on the May 4 special-election ballot to meet that goal.
Council members said the ballot issue would balance the tax load across multiple sectors of a growing community, keep pace with the need for improved services and make the city more competitive from an economic standpoint.
The measure would raise the city’s income tax from 0.75% to 2.0% and increase the credit for taxes paid in another municipality from 25% to 100%.
If approved in May, the issue is estimated to generate $3.4 million annually in revenue for the city and would begin being collected in 2022.
Not everyone’s taxes would rise, though, officials said, as the measure shifts a portion of the tax burden from residents to nonresident workers.
Mayor Frank Bertone said Powell residents who also work in Powell would see the full increase from 0.75% to 2.0%, but those who live in Powell and work elsewhere “stand to have a positive or neutral impact” on their income-tax bill.
That’s due to the credit increase, meaning residents would pay income tax to Powell only if they are taxed below 2% in the municipality where they work.
Bertone and council member Tom Counts both said the credit is an important feature in this proposed tax measure. Both said anecdotal feedback after income-tax increase measures were defeated in 2010 and 2018 was heavily focused on the lack of a change in the credit.
Bertone said retirees who derive their income from Social Security or pensions would not see an increase because those are not taxed as earned income.
Counts said the measure would take advantage of recent growth in Powell’s business community.
“We have the opportunity to generate $2.7 million in revenue from nonresident workers,” Counts said. “That’s 80% of the new revenue that would come from the tax.”
Counts said if the measure were enacted, the percentage of the total municipal income tax paid to the city by residents would decrease from 65 to 42.
The city has placed a calculator tool on its website, cityofpowell.us, so residents could enter their income and their workplace city to see how the change would affect them specifically.
Counts said the measure isn’t solely about shifting the tax burden onto nonresidents, though. Acknowledging that some would see their taxes increase, he said the city is overdue for improved revenue streams to support city services and maintain quality of life in Powell.
“I don’t think people moved here for the low income-tax rate. I think, like (my family did), people moved here because it’s safe, it’s well-maintained and it’s a community that is a wonderful place to raise a family and then stay in retirement,” Counts said.
City Manager Andrew White said the income-tax rate has remained flat at 0.75% for 31 years.
The ballot issue “would create an appropriate level of revenue and level of predictability of resources to support the work of the city,” White said.
He said certain budget areas -- street paving and maintenance in particular -- have been negatively affected.
“(Powell) councils have had to be lean and mean machines for 31 years,” Bertone said. “But some of the tools, development fees and other one-time funding mechanisms that helped build our infrastructure are now city costs.”
White said improved services would not only benefit current residents and businesses but also would help attract new business, as well.
In addition, he said, increasing the rate from 0.75% to 2.0% would give the city flexibility in terms of incentives it could offer to new businesses that are looking to relocate or expand and otherwise might bypass Powell.