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Macedonia Council Plans to Put another .25% Income Tax Increase on the Ballot in November 2018

(Macedonia income tax would increase to a 2.5% rate from the current 2.25%)

Commentary by Sylvia Hanneken.

I plan to provide Macedonia residents insight into the questions about this proposed tax increase in a multiple part series in the next several weeks to show residents why this increase should not be supported.

In case you missed the Macedonia Finance meeting on June 7th, (and only two residents not part of council or administration were there), you may think that the Council has been dissuaded from putting another income tax increase issue on the ballot by voters rejection of multiple attempts to raise taxes in the past two years.  Your optimism has been misplaced if that was your hope. Council is planning to place a .25% income tax increase on residents, non residents and businesses on the November 2018 ballot. First reading for the proposed November 2018 tax increase legislation was held at the June 14 Macedonia City Council meeting.

First, is this proposed tax increase a result of a Macedonia revenue crisis?  Has our revenue to support basic services declined in the past five years?   The short answer is NO.  Macedonia revenue this year is higher than it has ever been.  

Macedonia residents voted for a 2.25% income tax rate In May 2017.  This income tax (Issue 3) increased the tax rate on non-residents and businesses to 2.25% while providing for a Macedonia resident refund that continued their effective income tax rate at 2%.

  • The result is higher income tax revenue for Macedonia this year.  In fact, the May 2018 income tax revenue is $537,000 (26%higher) than May 2017 year to date.

Also, Macedonia budget revenue has been increased by the imposition of the Northeast Ohio Regional Sewer District (NEORSD) storm water fee (essentialy a property tax) on all Macedonia residents and businesses.  

  • The result is that Macedonia revenue has increased approximately $225,000 annually from the 25% local share of NEORSD funding for storm water projects to our city.  In addition, NEORSD provided an additional $380,000 in regional storm water funds for the Sioux Lane culvert replacement over Indian Creek in the past year. Macedonia expects to receive additional funding via NEORSD regional projects in the coming five years.

In addition, Macedonia paid off our construction debt for the recreation center and city hall at the end of 2016

  • The result is that approximately $1.1M of funding annually from Macedonia budget to pay for these debts has been released to support other expenditures.

Finally, has there been a dramatic drop in state revenue in the last 5 years?  No, with the exception of the inheritance tax repeal, there has been no decrease in state revenue in the past 5 years.  There were 50% slashes to the local government fund state budget subsidies for all Ohio cities in the 2009-2012 recession that have not been restored.  In the case of Macedonia, that cut amounted to approximately 225K annually.

Second, are we under-taxing our Macedonia residents’ family/household income? Evidence does not support that view.  

Macedonia’s family/household income ranks in the top 13% of Ohio cities.  The average income tax rate in the top 20% of Ohio cities for family/household income is 1.7% with 100% credit.  

Finally, instead of spending another $20K or more taxpayer money on marketing an each of these proposed income tax increases (as we have done with multiple attempts), let’s start looking for how we can respect our residents perspective that rejects this perpetual tax increase cycle.   Council should start by renewing the existing fire levy property tax this November. The renewal is pretty much a given to pass and will preserve the funding for existing Macedonia firefighters. If the Council goes down the risky path of pushing for an income tax increase, and it fails, Macedonia residents will know that any fire protection funding lapse is the Council’s choice, not their choice.

Next time:  What do we need to fund in our capital budget and how do we get there?