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Press Release:
City Officials Ask Voters To Support Revenue Plan
Imploring voters to maintain core city services, Columbus city officials announced they will ask Columbus voters to support a 0.5 percent tax increase on the August ballot. Mayor Michael B. Coleman, all seven members of Columbus City Council, Chief of Police Walter Distelzweig, Chief of Fire Ned Pettus, City Auditor Hugh J. Dorrian and City Attorney Richard C. Pfeiffer said passage of the plan is essential in order to provide police, fire, health and other basic neighborhood services. The 0.5 percent increase is a key part of the city’s long-term plan to sustain the quality of life in Columbus through new jobs, government reforms and new revenue.
“In order to grow our economy and fight for jobs, we must have a safe and clean city and strong neighborhoods,” Mayor Coleman said. “If citizens support our three-point plan for jobs, reform and revenue, we can maintain our quality of life for many years to come.”
City Council will vote May 11 on a resolution to authorize the City of Columbus to submit an income tax increase to the voters in August, 2009. To go into effect, that resolution must be approved by the voters.
“The citizens of Columbus have a choice to make between maintaining core city services such as police and fire protection at the levels our residents have come to expect or experience drastic cuts,” said Council President Michael C. Mentel. “The declining national economy has forced us to find new sources of revenue to fund the basic services and economic development efforts that will help Columbus succeed in the coming years.”
Columbus city government has been making tough decisions for the last decade to keep its finances sound while maintaining safe and strong neighborhoods, cutting its civilian workforce by 30 percent, spending $67 million less than budgeted and cutting $155 million from what would have been business as usual since 2001. However, the Economic Advisory Committee assembled last year by the mayor and council has said the city must have new revenue. Most of a 0.5 percent increase of the city income tax would be paid by commuters who work in the city. This is the fairest way to shore up the city’s long-term finances, while keeping the city economically competitive. Those with high incomes would pay the most, those with low incomes would pay the least, and those with no incomes would pay nothing at all. For a middle-class Columbus household making $40,000 a year, the increase would cost less than $17 a month.
How about taxing the churches and clergy? If you ask me they’ve had a free ride for far far too long. Property tax too.
How about strategies other than tax abatements to encourage new business growth and getting people to move downtown?
joev Says: How about strategies other than tax abatements to encouraging new business growth and getting people to move downtown?
+1
People and businesses want specific amenities. The two questions I hear the most about living downtown involves schools and grocery stores. I’m already paying a third of the property taxes that my friends do in comparable-sized homes in the burbs. Having those abated in some way isn’t really going to convince too many more people to move downtown.
As for the tax hike, I can see both sides of it. I haven’t read enough about it yet to completely make up my mind on how I’m going to vote. August is still a long way away. I’ll continue to sit back and read the commentary for a bit longer. ;)
My sense is that this isn’t going to be very popular, particularly when there are so many civic-minded people here who are uncomfortable with it.
Seems to me that the city will need to go to extraordinary efforts to prove that it has done everything it can to reduce costs if it wants to have any chance of pushing this through. I’m sure that concerns about police and fire cutbacks are legitimate, but if they’re promoted to the exclusion of transparent discussion about real cutback efforts then mentions of safety services will inevitably come off as fearmongering.
I still think that the city should implement salary reductions consistent with the average decline in salaries city-wide first.
“In fact, according to a recent survey by the Tax Foundation, Ohio has an average tax burden roughly similar to New York, California, Massachusetts and Connecticut. But while the others are comparatively high-income states, Ohio residents no longer enjoy that level of affluence.”
Read more at New Geography.
“My sense is that this isn’t going to be very popular, particularly when there are so many civic-minded people here who are uncomfortable with it.”
+1
I usually am pretty open to tax increases when they are necessary, but even I’m not so sure how I will vote on this one.
In the Dispatch chart on tax rates, we would be #2 in the state (right behind Youngstown). Youngstown is in complete distress (and maybe its justifiable for them) but we are not.
I’m concerned about this creating a big disincentive for jobs to stay in the city, vs leaving for the burbs. I would rather see us pay for more city services directly. Or, at least open the discussion about diverting more capital improvement money over to general operations.
I just don’t feel this is gonna pass. All else being equal this should raise an extra $98.3 Million in 2010. That would boost General Fund revenue to $712 Million. Compare that to 2008 revenue of $634 Million and 2009′s projected $613 Million. And the benefit of an extra 16% in funds would be the promise of not laying off more poloce and firefighters? They’ve already made cuts left and right that reduce services, and added user fees, but there is no mention of what will be restored. What does the extra $100 Million buy?
And I don’t buy the argument that this makes up for cuts from the new State budget. It hasn’t been finalized yet, and shared revenue only accounts for around 9% of the total. Also, any federal stimulus funds should definitely be budgeted separately and can’t be used to balance our budget.
Bring it. This is nothing compared to Philadelphia’s City Wage Tax, which is 3.5% for non-residents, 3.93% for residents.
@ catnfiddle –
Without knowing whether the rest of Philly’s budget comes from a smaller percentage of property tax, state shared revenue, user fees, etc., how can that be a valid comparison to Columbus, and an argument for this increase? And are their expenditures comparable? Services provided?
Besides, everyone knows what a heaven-on-earth Philadelphia is… :-p
#18
drew Says:
April 28th, 2009 at 9:17 am
“Matthew – the way I figure it, the city has the info (from tax receipts) necessary to figure out the average drop in income since last year. If they instituted city government-wide salary reductions based upon that average percentage drop and still had a demonstrable shortage of tax income, then I’d be happy to pay an increase.”
I agree, the private sector does the cuts much quicker. I had to deal with a 5% cut this year compared to ’08 and no 401k match. I believe the city has been doing the same but they need to realize that if the private sector is doing the cuts, they must respond with the same cuts across the board. Over the last five years I think the city was using up too high of percentage of its budget on police (70%). Maybe dealing with the city’s unions is causing some of the problem.
I too would like to see the city and all departments make a few more reductions before asking the public to pay more. Good question, what will this extra 100 million be placed in the budget? The city could answer that now.
My point is that I’m willing to pay the increase if it means maintaining or improving the state of the city.
catnfiddle – conceptually, I’d guess that most feel the same as you do, as long as the words ‘efficiently’ and ‘fairly’ are entered into the mix when talking about improving the state of the city.
If government workers are subjected to the same losses of income that private sector workers are, then I will be satisfied that the additional tax income is necessary – if only because it will then be certain that they truly understand the impact of raising taxes by sharing the same financial circumstances that private sector tax payers face.
The question then becomes, “Will the city improve by 16 %?” That is a huge increase with no corresponding plan for spending it. If $100 Million is needed just to maintain the status quo, we have a big problem.
I’d vote for it if it were a tax increase for a certain period of time, but not forever.
have there ever been any tax decrease votes after taxes have been increased?
It is indeed enormously difficult to compare different US cities tax regimes with each other. Some cities get more help from their states, some less. Services offered are different, etc.
But this can definitely be said:
*Ohio’s home rule provision gives cities enormous power for offering of services as well as taxation and potential sources of revenue. Ohio cities’ ability to raise taxes is unparalleled–particular for their size.
*If you aren’t happy with your property taxes now, sit back and wait. Current assessments aren’t reflecting the drop in property values. They will beginning next year. (That will mess around with school budgets terribly, so emergency levies may be requested.)
*Public sector unions in this state are very strong. They have worked for decades to get their employees compensation and benefits packages that are world class.
Though I’ve not confirmed this for myself, they were likely being way underpaid until the 1970s. Today Columbus municipal employees have benefit packages that are significantly better than most people enjoy (particularly in regards to health insurance and pensions.)
That is of course very expensive. In Ohio, public sector unions rather have lay-offs than across the board salary/benefit cuts. I understand why they do it that way, but it wreaks havoc with finances when tax revenues drop and they force a choice of “higher taxes or fewer policemen.”
I don’t consider myself anti-union, but I think this is a fair summary of the problem governments face.
In my opinion the problem we have is that voters have the ability to approve or deny tax increases, but we don’t have the ability to approve or deny tax spending. The founders of Ohio’s Constitution assumed that the majority of tax spending would be capital spending, so they went crazy making sure that voters have the ability to approve capital spending and bonds.
In reality, only 20% of Columbus’ budget is capital. 80% is salary/benefits (from my recollection.) So while we can approve/deny tax increases and approve/deny capital spending, we don’t have the ability to approve/deny the other 80%–which would basically be union negotiated employee contracts.
I’m sure you can see where I’m going with this. :-)
Right now I’m leaning against this. If it were an increase for the streetcar and light rail combo or complete streets modifications in several more neighborhoods this would be easy to vote for since they’d greatly benefit the city in the short and long term.
I knew I could count on CU for an insightful discussion of this proposal. I’ve been reading the NBC4 comments which are mostly along the lines of “lolzIhatethemayer!!1!1″ and “well if the mayor just cut his salary that would fill the budget gap and we’d have all this money leftover to hire 10,000 police officers”.
I’m undecided but leaning slightly in favor at this point. My main concern is that we need to know in as clear terms as possible where the money will go, not just “into the general fund”. Also, although I don’t personally dislike the mayor, he isn’t doing himself any favors by having 19 people on staff which is the same number as in 2005 while other city departments have seen their headcount reduced. Even if they are saving money in other places, they also need to look like they’re saving money even if its a token gesture (more than just a salary freeze).
I’ll have my voting location changed by August, so I’ll be one of those “work in Columbus with no say on my income tax” folks.
Not to further the suburban sprawl bit, but maybe it’s time to embrace our sprawl as a good thing.
The logistics would be an absolute nightmare, but there may be something to creating a true “City of Columbus” with a cohesive vision for growth and development, a far greater tax base for support, more unified city services, the ability to better the school system-rather than continue with “the City of Columbus-and Grandview, Upper Arlington, Worthington, Bexley, Westerville, Whitehall, Reynoldsburg etc.”
LO2W: I think what you’re talking about would be classified as embracing regionalism or consolidation, not necessarily embracing sprawl. After all, bringing Worthington into Columbus would make Worthington neither more nor less sprawling. As to regionalism as a cost-saving measure, I could see it saving a little bit of money, but not a great deal. Police and fire units would have more ground to cover, even if they could all benefit from a central dispatcher and reduce redundancies. Also, expect residents of Grandview, Worthington, etc. to fight tooth and nail to prevent integration into Columbus Public Schools, which are a separate municipal entity from the City of Columbus (just as Worthington City Schools are not a subdivision of the Worthington city government).
I tend to favor income taxes over sales taxes both because sales taxes are regressive, punishing most those who have least, and because they encourage the fiscalization of land use. Municipalities that rely heavily on sales taxes basically have every incentive to use zoning, tax incentives, and every other political power they’ve got to become endless seas of retail space. Car dealerships are gold mines in such districts. Consulting firms, software firms, banks, law firms, etc. are not, because they aren’t actually out there selling anything. They do attract high-paying jobs, though.
I’d much rather that the city government of Columbus set itself up to rely more heavily on the income tax and less on sales and property taxes; I’d vote in a heartbeat for any proposal to raise the income tax while at the same time lowering the property tax. The reason is that deliberately making the attraction of high-wage jobs to the area would put Columbus’ government’s incentives exactly where I’d hope to see them. Just as a government heavily reliant on sales taxes has an incentive to orient policy to favor car dealerships and malls, a government heavily dependent on income taxes has an incentive to favor high-skill, high-wage, white-collar jobs. You would think that any government would want to attract those jobs anyway, but the prospect of losing tax revenue does tend to focus some public officials’ minds. (Similarly, much as I hate property taxes because they do effectively turn you into a tenant in your own house, reliance on property taxes does give public officials an incentive to do all they can to keep values high, including, inter alia, taking care of public infrastructure and keeping neighborhoods safe.)
This isn’t a substitution, though. This is a straight-up increase, and I’m concerned about the comparative overall tax burdens between Columbus and peer cities.