FINANCE COMMITTEE OF COUNCIL
CITY
HALL, 100 LOCKVILLE ROAD
WEDNESDAY,
APRIL 16, 2008
INCOME
SUBCOMMITTEE
7:55
P.M.
1. Mr. Smith opened the Finance Committee Income Subcommittee at 7:55 P.M., with Mr. Smith and Mr. Wisniewski present. Mrs. Sanders was absent. Others present were: Mayor O’Brien, Mrs. Hammond, Tim Hansley, Lynda Yartin, Linda Fersch, Ed Laramee, and others.
2. APPROVAL OF MINUTES OF March 19, 2008, meeting. Mr. Smith stated as Mrs. Sanders was not present this evening, and Mr. Wisniewski was not present at the March 19th meeting, he would request these minutes be carried on the agenda for approval at the next meeting.
3. SCHEDULED MATTERS:
A. Presentation by Mr. Laramee of the Fairfield County Auditor’s office. Mrs. Fersch stated the Committee had requested Mr. Laramee provide a background on effective millage for police levies. She stated she had distributed the Police Department Revenue and Expense History that includes the effective millage rate.
Mr. Laramee distributed a document called “Tax Facts” or answers to frequently asked tax questions. He stated Mr. Laramee stated this document is published in December of each year, after they have the results of the elections and they have all the new valuations for that they will be sending the tax bills based out on. He further distributed a handout showing every levy in Fairfield County, with the last three sheets pertaining to Pickerington’s levies and their tax district. Mr. Laramee stated your property tax depends on where the value increases are coming from as to what it will do with the dollars you bring in. He stated if you put a value on land, you increase its value, but not on the land. You didn’t make any more land. If the land went from $50,000 per acre to $200,000 an acre because of demand, it is reappraised. It is the same land. He stated the police levy is a voted levy and it goes up and down depending on what happens with the carry over value and what you bring in for new construction. Mr. Laramee stated the Auditor’s office, based on the settlement you just received, expects you to bring in $788,800. He stated they had estimated $787,000. He further stated based on your current collections, if you took in 100 percent based on the valuation that went out and the rates, the police levy would bring in $1,571,000. He continued saying if you did not collect 100 percent, they would estimate $1,526,000, so somewhere between those two figures is what you would bring in during the year. He stated this is based upon its current rates. Mr. Laramee stated if nothing happened on that levy, and you were to renew it, and it expires in 2008 and is last collected in 2009. He stated the first time you could go to the ballot is this coming November for that levy. Mr. Laramee stated if you went in this November it would just pick up and start when this one expired. He stated renewing it meant it continues to reduce and right now on residential property it is 3.724974 mills instead of the 5.5, which it was originally voted at, so if you renewed it, it would just continue to go down from that point. Mr. Laramee stated you must do something with this levy in the election this November, or in the primary or general election next year. Mrs. Fersch pointed out that our police levy is a continuous levy and therefore does not need to be renewed. Mr. Laramee stated Mrs. Fersch is correct, this is a continuous levy. Mr. Laramee stated if the City were to replace it and bring it back up to its original 5.5 mills, if you put it on in this November and it were to pass, he would tell you to have it be effective on 01-01-08, first to be collected in 2009. He stated that would mean if it passed in November you would immediately begin collecting it in 2009 at the higher rate. He stated if you do not put it on in November you would miss that year of collection. Mr. Laramee stated in bringing everything up to 5.5, it would bring in somewhere between $2,319,000 and $2,252,000 at this value. Mr. Laramee stated he hoped he had answered the Committee’s questions on the issue of the police levy. Mrs. Hammond stated she would like to clarify that our police levy is continuous and is not up for renewal. She further clarified that if we put a replacement levy on the ballot and it failed, we would still have what is currently in place. Mr. Laramee stated that was correct, but this levy will continue to go down and when you go to renew it you are not talking 1.7 at that time, you would be talking maybe 2.2, depending on when you move. Mr. Smith stated if the police levy is put on the ballot you could put it on as a 5 mill replacement levy and Mr. Laramee stated that was correct, but you would have dropped off one-half a mill out of the 1.7. Mayor O’Brien stated as far as timing, should we choose to go down this path; we need to have everything at the Board of Elections 75 days before the election. He questioned if it had to go to the Auditor’s office prior to that for anything. Mr. Laramee stated it must go to his office and they have up to ten days to process a request for an estimate. He stated the first step is Council passes a resolution directing the Finance Director to go to the Auditor to get an estimate on how many mills would be required to produce “X” amount of dollars and the specifics of what you plan to do, such as what election you plan to go in, whether you are planning additional millage a replacement levy or whatever. He stated they have ten days from the date they get that request to produce that document, it would come back to Council, and then you would pass a Certificate of Need to go to the Board of Elections. He stated the Board of Elections will require a copy of the Certificate of Estimate from the Auditor’s office, which they will verify with the Auditor’s office. Mr. Laramee stated if Council was thinking about going on the November ballot, the time frame is very, very short. Mr. Wisniewski stated with a 5.5 mill replacement levy we would get approximately $700,000 from that the first year. He stated he would like to sit down with Mr. Laramee at some other time and go through the entire process about the millage decreasing, etc.
Mr. Wisniewski clarified that on the police revenue and expense history, the income tax column shows the income tax that went to the police department. Mrs. Fersch stated it shows that the year the levy went back to 5.5 mils the General Fund provided the police department with less money. She stated for the year or two before the police department was built, the General Fund could keep that money and then when we started paying the lease and the cost of the police department escalated the General Fund had to make up the difference. Mr. Wisniewski then clarified the expenditure column includes everything in the police department other than the building. She stated in the years that we have had impact fees; we have been able to use some of that for the police department lease. Mrs. Hammond stated then if we had a 5.5 replacement levy we would receive an additional $700,000 and she questioned if that would have enough of an impact. Mr. Smith stated that would be $700,000 that did not come from the General Fund. Mr. Smith stated the expenditures also increase, so there wouldn’t be that much of an increase. Mr. Smith further stated the majority of the expenses of the police department are in labor. Mr. Wisniewski stated 80 to 85 percent of the cost of the police department is related to labor.
Mrs. Fersch stated she had provided to the Committee information showing income tax receipts over a ten-year period, the top 25 city businesses as far as income tax receipts, and income tax for employees/businesses working in the City. Mr. Wisniewski clarified the last section on the third sheet is only devoted to people working in Pickerington. Mrs. Fersch stated the first figure is the withholding from city employees, the second column are businesses that pay the one percent, the nonresident subcontractor employee who pay the one percent, and the final figure is the subcontractor net profit based on the business itself. Mrs. Fersch stated the refunds we have to do are not reflected in this information because refunds do not fall into a specific category.
Mr. Wisniewski stated as he understood the information provided b Mrs. Fersch, we bring in $2.4 million from people paying the one-half percent, and we give a one-half percent credit to our residents who pay taxes to another city. Mrs. Fersch stated not everyone gets a credit because there are some residents who file returns that work from home, do not work in a taxing area, work in the city or whatever. Mrs. Fersch stated when we ran the income tax report it showed that we had written off $1.3 million as credit for people that pay tax outside the City of Pickerington. Mr. Wisniewski stated we are then bringing in $1.75 million from the people that live and work here and from the people that just work in the City and pay the full one percent. Mrs. Hammond stated the majority of the people that live here do work somewhere else and pay taxes where they work. Mr. Wisniewski stated if we increased our tax to 1.5 percent then we would be looking at an additional $700,000 to $900,000. Mrs. Fersch stated that is an area that can grow. Mr. Smith clarified that Mr. Wisniewski meant was referring to raising our tax to 1.5 percent with a one percent credit, so everyone that lived here and worked elsewhere would basically be paying the same as they are now, and this would affect the businesses and the people who currently pay the full one percent. Mr. Wisniewski stated he felt the only options open to us were to raise the police levy back to 5.5, increase our tax rate to 1.5 or 2 percent, or take away the credit we now give our residents. He further stated the question was if we want to continue providing the same services we do now, how much do we need to bring in, at a minimum, in additional income. He stated we either need to increase our income or cut services. Mr. Wisniewski further clarified that Mrs. Fersch’s recommendation was based on the fact that the income tax will grow. She further stated she felt the residents would accept the increase because Columbus is going to do something next year and they are already paying quite a bit to work outside the city. She stated by increasing the police levy you would burden our residents, property owners and that includes senior citizens who are on a fixed income. She stated further we would be on par with Reynoldsburg at 1.5 percent and Canal Winchester’s is 2 percent. Mr. Wisniewski stated further the credit that we give to our residents is authorized by ordinance, and that can be taken away without going to the ballot. He stated if we want to go to the ballot we can offer the opportunity to the citizens to come more in line with other communities, and our residents will still receive the credit. Mrs. Hammond stated if we leave it with the residents paying the one-half percent like they are now, and since the seniors do not have to pay it on their retirement, she felt the citizens would approve it. She further stated we could do away with the credit, but it might be nice to hold onto that ability in case the City ever did get in dire straights. Mrs. Fersch stated if the credit were included in an ordinance, once it is voted on, that credit is a voted item. Mr. Wisniewski stated he is adverse to a police levy because it will hit everyone. Mr. Smith stated he agreed because it would hit people that are already paying other municipalities where they work and the one-half percent here. Mr. Smith stated he felt the question would be how high a tax raise and how much credit we would give our residents. He stated in order to know what to do, they needed to have a good projection of what our expenses would be for the next few years. Mr. Wisniewski stated he did not feel we could project into the future what our income will be. Mr. Smith stated he just would like to know from the expense side, a good projection of expenses, and we knew we would have about $800,000 incremental revenue, then he would know what option would be best. Mr. Smith asked if Mrs. Fersch could work up the options that have been discussed this evening showing what amount of additional income they would provide. Mrs. Fersch clarified these options included the replacement levy at 5.5 mils, a 1.5 percent income tax with a one percent credit, and a two percent income tax with a 1.5 percent credit so the residents are still paying the same amount. Mr. Wisniewski stated if that information can be put together he would not be opposed to having a meeting to review it and then forward it for discussion by the full Finance Committee and get one with it. Mr. Smith stated he and Mrs. Sanders are here on May 5th for Safety Committee anyway and perhaps a subcommittee meeting can be scheduled to follow the Safety Committee meeting. Mr. Wisniewski stated if it is determined that we want to get one of these on the ballot in November we need to get the process moving. Mrs. Hammond stated the majority of discussion would be at the full Finance Committee so most of the questions can be cleared up before it gets to Council floor. Mr. Wisniewski stated what he would like from Mrs. Fersch is a document that shows our general fund budget, how much we bring in every year, how much goes to the police department, how much goes to roads, and how much goes to our debt payments. He stated he would like to see that include rough estimates of Diley Road, S.R. 256, the police station, the downtown renovation, etc., all the debt that we have done as a City that we are still paying for. He stated people might not understand what we are paying for. He stated further it is easy to say the city is not spending their money wisely, that they are being wasteful, but the reality is the city has been pinching pennies for a long time. Mr. Smith stated he would coordinate with Mrs. Sanders and get back with Mr. Wisniewski if a subcommittee meeting would be scheduled for May 5, 2008, immediately following Safety Committee.
3. ADJOURNMENT. There being nothing further, Mr. Smith moved to adjourn; Mr. Wisniewski seconded the motion. Mr. Smith and Mr. Wisniewski voted "Aye." Motion carried, 2-0. The Finance Committee Income Subcommittee adjourned at 9:50 P.M., April 16, 2008.
RESPECTFULLY SUBMITTED:
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