Commentary by Sylvia Hanneken
This is my second (of three) letters to the editor concerning Macedonia’s budget and the request for an additional .25% income tax. Read the first one here.
Macedonia residents are probably wondering why our residential roads maintenance was ignored for over a decade while these roads deteriorated in the face of the usual (not unsurprising) northeast Ohio winter weather. This is a cautionary tale for residents when your politicians promise we don’t have to make choices about spending.
- Macedonia’s primary source of funding for operations and capital expenditures is revenue from city income tax and property taxes. In other words you (the residents) and businesses (and their employees) located in Macedonia pay the bills.
- Macedonia does receive revenue from the State of Ohio in the form of direct and sales tax revenue. Ohio has cut or redirected some (not all) funding to the state budget and eliminated the inheritance tax, but this all occurred after 2011 and was not a primary revenue source anyway.
Our residential roads deteriorated badly between 2000 and 2012. What prevented Macedonia residential roads maintenance expenditures between 2000 and 2012?
- Debt payments and commitments (not for residential roads). From 2000-2008 our median income tax revenue was between $6.8 and $7 million dollars that supported operations and capital expenditures. Zero funding for residential roads or emergencies was put into the budget.
- 20 year loans for construction of the Macedonia Recreation Center and the new Macedonia City Hall drained $1.1 million dollars annually from local income tax revenue during this entire period. This debt was finally paid off at the end of 2016.
- Macedonia also committed funds for major ODOT bridge construction over State Route 82 and Highland Road with over $4.5 million in State Infrastructure Bank (SIB) loans after 2005.
- 2009-2011 Recession. Median income tax revenue dropped precipitously in 2009 and 2010 due to the recession. The income tax revenue decreased from a median close to $7 million annually to $5.8 million annually in 2009-2010. The fallout was made more severe by having no revenue reserves. Macedonia responded with a temporary .25% income tax increase covering 2011-2013 to boost income tax revenues as a result of the severe recession. The property tax revenues (just over $2 million) did not decrease because Ohio revised code provides for stable collection of property tax revenues (based on HB920).
- After 2012, Macedonia income tax revenues rebounded to a median of approximately $8.3 million annually as the economy recovered. This income tax rate was steady at 2% from 2013 until the middle of 2017 when a .25% income tax increase on Macedonia businesses and non-residents who work in Macedonia went into effect. The Regional Income Tax Authority (which collects city income tax) reports Macedonia 2017 income tax revenues increased to $9.07 million annually. More will be collected in 2018 due to the .25% increase passed in 2017 being collected for a full (vice half) year.
In summary, due to other City of Macedonia commitments and revenue priorities, (primarily Macedonia building costs and ODOT construction costs), residential roads were not included in annual capital expenditure planning/funding for over a decade. Regular capital planning and funding do matter, including funding of residential road maintenance. When the city ignores that truism, you get the fallout problems we have now. When residents are not informed, abuse occurs.
In my final letter on the Macedonia budget and taxes, I plan to look at what has happened to our Macedonia operations costs between 2013 and 2018 and what that says about your tax dollars at work.