FINANCE COMMITTEE OF COUNCIL
CITY
HALL, 100 LOCKVILLE ROAD
WEDNESDAY,
MARCH 19, 2008
INCOME
SUBCOMMITTEE
7:40
P.M.
1. Finance Committee of Council’s Subcommittee to review Income opened at 7:40 P.M., with Mrs. Sanders, Mr. Smith, and Mrs. Hammond present. Mr. Wisniewski was absent due to vacation. Others present were Lynda Yartin and Linda Fersch.
2. SCHEDULED MATTERS:
Mr. Smith nominated Mrs. Sanders as Chairman of the Subcommittee and it was determined the subcommittee would meet monthly immediately following the Finance Committee regular meeting.
Mr. Smith stated he has been looking at this for awhile and any analysis led him first to a police levy or an increase in income tax. Mr. Smith stated he was not sure the citizens would support an increase in income tax.
Mrs. Fersch stated she had provided a handout on Revenue Enhancement for Cities, a chart on municipal income tax rates from various communities in the area, and the Pickerington Income Tax Report as of December 31, 2007, to the members for their review. She stated she found some of the fees charged by other cities shown on the revenue enhancement handout very interesting. She stated our hotel/motel tax could be increased but part of it would have to be given to the Lancaster Convention Bureau. She stated that would not be the big revenue generator that we need right now, however. Mrs. Fersch stated she had also provided the Committee with a listing of the top 25 employers in the City and the amounts of income tax they withhold. She stated this is an area that will grow as more new businesses come in.
Mrs. Sanders stated it appears that Pickerington’s tax is relatively low compared to the surrounding areas. Mr. Smith stated there are all kinds of ways to posture an income tax increase. He stated, for example, if you raise the income tax rate to two percent, you could do something with the credit that we give if you pay to another City. Mr. Smith stated from everyone he has spoken to he did not feel there was a chance of a tax increase passing. Mrs. Fersch stated her thought was to raise the tax to 1.5 percent and keep the credit the same. She stated those that are paying to another community would still be paying the .5 percent to Pickerington. She stated the ones who work in the City would be paying the 1.5 percent. She stated this would bring in approximately an additional $700,000, and that is only on the City withholding. She stated you have subcontractors that work here, and there are other local employers who will not withhold City tax so that would be income at the end of the year. Mrs. Fersch stated this increase would not affect senior citizens like you would on a police levy, and is most people had to go outside the community to work they would be paying a higher rate as well.
Mr. Smith stated the reason he came back to a police levy is because we can tie it to something very tangible for the residents, because we know what police services are costing. Mrs. Hammond stated Mrs. Fersch would prefer not to tie it as much to a police levy so we would be able to spend the revenue elsewhere. She stated further when the other subcommittee looks at the expense side, we could tie it to the services we provide such as leaf pick-up, snow plowing, street improvements, etc. Mrs. Fersch stated if you look at the CIP you can see all of the projects we need to do. She stated with a police levy we would be faced with the same thing, the police levy in the past was a replacement and we were collecting almost three percent. She stated the replacement moved it back up to 5.5 so everyone thought it would just bring it back to that amount. She stated it doubled the amount of money they received, but property values went up and as the property values go up we still have the reduction factor that brings it back down again. Mr. Smith stated the amount the levy generates is fixed year to year, but the demand for services and cost to provide police services keep going up. Mrs. Fersch stated the General Fund gives quite a bit of income tax money to the Police Department each year. She stated she felt the seniors especially would be very upset unless they felt we really needed that extra police protection. Mr. Smith stated he would not tie it to extra police protection; he would tie it to the incremental increase in the cost of delivering police services since it was originally put in. Mrs. Sanders inquired if we increased our income tax to 1.5 percent, would we not have to do a police levy as well at some point in the near future? Mrs. Fersch stated leaving the police levy as it is, each time the property is revalued, it will decrease, but the money is still going to come in at the same amount. She stated we are receiving $1.2 million now and the only thing that is going to increase is new construction that comes in. Mrs. Hammond stated she felt what we were looking for is something where we do not have to come back in a year or two. Mrs. Fersch stated businesses pay the policy levy because they are getting the police protection. She stated they may not be paying any income tax except for their employees, and that is why she did not want to see the police levy go away completely as there has been talk about.
Mrs. Hammond stated whatever decision is made; we will have to let the residents know why it is being done. Mr. Smith stated he felt it was compelling in the public safety area because the last time the police levy was voted on was in 2002. Mrs. Hammond stated she did not feel the police levy could be raised enough to pay for the police. Mrs. Fersch stated we are currently collecting at 3.72 percent. She further stated the County Auditor had said that whenever property is annexed or new construction, the levy is collected at the reduction factor not at the 5.5 percent even though it is new. Mrs. Fersch stated she does not have the final figures of what we are collecting because the County does not do the final figures until April.
Mrs. Fersch stated we will be getting less money from Personal Property Tax because it is being phased out and the police levy affects personal property tax. Mrs. Fersch stated she felt it might be a good idea for the County Auditor to attend the next meeting for discussion regarding property tax.
Mrs. Sanders stated she would think senior citizens would see the need for a policy levy rather than an income tax increase. Mrs. Hammond stated she did not agree because a large portion of seniors are on a fixed income and every time the taxes go up it affects their budget. Mrs. Fersch stated everyone is being affected by the economy, and Mrs. Hammond stated no matter what decision was made, to ask for a police levy or increase taxes, there must be a plan in case it does not pass. Mr. Smith stated the challenge to our budget now is because of the economic slump, and that will not last forever. Mrs. Hammond stated that was correct, but while people are feeling the economic slump, they will not want to raise their taxes. Mr. Smith stated that was true, but our citizens are used to a set of services and our public expects the same level of services that we are currently providing. He stated he wasn’t sure that the public wanted less police on the streets wants less people in the service department, wants city hall to be less available. Mrs. Sanders stated it was a double-edged sword, especially for the seniors. She stated they don’t have extra money, but we don’t want to cut some of the programs that we have. Mr. Smith stated there is no good answer. He stated an income tax increase is such a huge thing, especially on the back of the school levies in the past few years, and a police levy can actually be tied to something real. Mrs. Sanders inquired if there were any options other than a police levy or income tax increase. Mrs. Sanders stated the schools have said they will stay off the ballot for four years, and she hated to have to put something on because everyone else is coming out saying they want to put things on. Mr. Smith stated revenues are depressed because of the slump, and his personal feeling is that the police levy is a replacement so it is back up to 5.5 percent, which, on top of the reevaluation that was just done, would have a huge impact. Mrs. Fersch stated we are already collecting at the lower rate on the reevaluation so she did not think it would double the amount brought in. Mrs. Hammond stated considering how much of the General Fund goes to the Police, she was not sure that raising that levy would make that big a difference. Mr. Smith stated he thought it would be almost $1 million and Mrs. Fersch stated she did not think so because it would be the difference between the 3.72 and the 5.5 percent. Mrs. Fersch stated right now we were bringing in approximately $1.2 million. Mrs. Sanders stated if she understood it, everyone thought that in November we would have to go on the ballot for something, and Mr. Smith stated that was what he thought. Mrs. Hammond stated in order to be on the ballot in November we need to have it to the Board of Elections in August. Mrs. Hammond stated that does not leave much time to make a decision, have public hearings, etc.
Mrs. Fersch stated for the next subcommittee meeting she would request Ed Laramee from the County Auditor’s office to come to address the Committee regarding property tax collections, etc. Mr. Smith further stated he would like to have an analysis on police services since the effective date of last replacement levy showing the total cost of our police service and how much it has increased year to year. Mr. Smith stated we know that impact fees are not going to generate enough money to continue to pay on the police building. Mrs. Fersch stated the General Fund is paying for the police building and the levy is an operating levy. Mrs. Fersch stated the levy is not paying for the building that was never the intent. Mr. Smith stated it is not paying for the operating of the police department because it costs a lot more than $1.2 million each year. Mrs. Hammond stated the police department will have to look at their expenses and make sure that everything we are expending is absolutely necessary. Mr. Smith stated he felt Chief Taylor has taken a very critical look at the budget and has cut everything he possibly can out of it.
3. ADJOURNMENT. There being nothing further, Mr. Smith moved to adjourn; Mrs. Hammond seconded the motion. Mrs. Hammond, Mr. Smith, and Mrs. Sanders voted "Aye." Motion carried, 3-0. The Finance Committee Income Subcommittee adjourned at 8:18 P.M., March 19, 2008.
RESPECTFULLY SUBMITTED:
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