By Bob Gaetjens
Record-Courier staff writer
STREETSBORO -- An income tax proposal, which would represent a tax increase for some residents and a decrease for others, may be on the ballot in November if City Council agrees it's warranted.
To help provide additional personnel and equipment for the police, fire and service departments, Mayor Tom Wagner said he wants council to place two issues on the November ballot -- a 1 percent income tax increase (bringing the rate to 2 percent) and a tax credit for the full income tax rate for residents who pay income tax to other cities.
The proposal would provide the city an estimated net increase of $2.9 million per year, according to an informational sheet created by Finance Director Ted Gordon, based on information from the Regional Income Tax Authority.
"We're understaffed and badly need this," said Wagner, adding he doesn't plan to set an expiration date for the tax.
According to the 2008 budget, the city anticipates receiving $5.3 million in income tax revenue.
If the proposals are approved, residents who work outside Streetsboro in a municipality where they pay 2 percent in income tax would not have the pay the additional 1 percent they currently pay to Streetsboro, said Gordon. Residents who live and work in Streetsboro would experience a 1 percent income tax rate increase, he said.
The proposal would mean a tax break for 6,500 residents who pay income tax to a city other than Streetsboro, according to the informational sheet.
Gordon said Streetsboro's commercial and industrial base would make up the difference and then some.
"The money the city (would lose) ... is more than made up for in the increased tax rate for the individuals who work in the city of Streetsboro," he said. "In my mind, it's a good example of a win-win situation."
Wagner said he plans to present five-year plans for the police, fire and service departments to help show how the annual $2.9 million increase would be spent.
Those departments need to establish vehicle and equipment purchase rotations, Wagner added. He said he doesn't want the city scrounging for money when vehicles and equipment need replacement.
"When a pumper (fire) truck is at the age when it needs to be replaced, we want to just be able to replace it," he said.
Wagner said council will actually have two items to consider as part of the proposal -- a hike in the income tax rate from 1 percent to 2 percent, and an increase in the credit given residents who pay income tax to other municipalities.
Law Director David Benjamin said council would have to approve placing the income tax increase on the ballot and would have to choose how to proceed with the income tax credit:
Before placing the tax increase on the ballot, council may pass a resolution, promising it will increase the credit residents receive from Streetsboro for paying taxes elsewhere from 50 percent to 100 percent, said Benjamin.
Or council could place the credit increase on the ballot, stipulating that it would only take effect if the tax increase on the same ballot is approved by voters, he said.
Very few municipalities have income tax rates of 1 percent or lower, said Gordon, whose income tax would increase under the plan.
"We all benefit from the services that are provided," he said. "If I were to seriously consider moving or working somewhere else, I think I would be hard pressed to find anywhere where the tax rate is less than 2 percent."