With the general election approaching Nov. 5, Twinsburg residents and officials will address Issue 18, the repeal of the quarter percent income tax hike first approved by voters in 2009.
A "yes" vote from voters would reduce the city's income tax rate to 2 percent, while a "no" vote would keep the income tax rate at 2.25 percent.
The increase was suggested as a method of funding the city after the loss of revenue brought on by the closing of the Chrysler Stamping Plant in 2008 and 2009. The initial measure in 2009 increased municipal income tax from 2 percent to 2.25 percent and passed by 3,457 votes to 2,579 votes (57.27 percent to 42.73 percent) in November 2009. Shortly after the increase went into effect, a sunset clause was approved which required council to place the issue before voters again after four years.
As that vote approaches, officials say the city can stay afloat without the extra revenue from the increase, which averages about $2.6 million per year.
Councilman Sam Scaffide recently said that the revenue built by the increase over the last four years -- about $8.54 million -- should allow the city to continue operating if the increase is repealed next month, though that situation may change in the future.
"My heart tells me that it is going to pass, (voters) will repeal it," Scaffide said. "At this stage in the game, we're very fortunate to have carryover. We've got money in the bank at this point, so to speak. Is (the increase) necessary right now? No, probably not. We can rescind it and continue to operate the way we have been without the quarter percent.
"Whether that's going to be long-term or not, I can't predict that," Scaffide added. "Right now, we're in a good position, but that's not to say you may never come back and ask for something else."
Councilman Gary Sorace, who originally suggested the sunset clause to the increase in 2009, also says another income tax increase could be sought by the city if finances take another hit in the future.
"If it turns out in a few years that something happens and we need to come to the people again, so be it," Sorace said. "In the meantime, we want them to know that they can trust us to stand by our word and to do what's right. Right now, we don't need the money and this is the right thing."
According to finance director Karen Howse, the quarter-percent income tax increase added $3.24 million to the city's income tax collections in 2012, $3 million in 2011 and $2.3 million in 2010. The city has also collected $2.7 million from the quarter percent increase in 2013 as of the third quarter, Howse said.
"Due to the quarter percent increase, the city was able to build up the general fund reserve balance," Howse said. Howse said the general fund cash balance grew from $5.7 million in 2009 to $10.3 million in 2010, to $15 million in 2011 and to $22 million in 2012.
Scaffide said that although the quarter-percent increase allowed for economic recovery following the loss of the Chrysler Stamping Plant, it wasn't the city's only response to the downturn. Wage freezes for government employees and stricter budgets citywide helped to bridge the gap and increase the carryover balances.
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