Middletown Forum : 1986 Change to City Income Tax

1986 Change to City Income Tax

City Commission Meeting
Middletown, Ohio
February 4, 1986

Report – Possible Change in Income Tax Distribution Formula
      City Manager Burns reported the staff has discussed easing restrictions on the formula for distribution of income tax revenues. Our present financial situation may merit a change, which would have to go to the electorate. We are very close on a timing schedule for filing for ballot items. If this is determined to be expedient, after budget hearings next week, we want to take the required steps to have this option open to us. This is to alert the Commission and the public to this possibility.
         Commissioners Donham and Schaefer wanted it to be clear that this is to change the formula and would not increase the income tax.

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City Commission Meeting
Middletown, Ohio
February 18, 1986

Ord. 086-22
Amend Chapter 890 of Cod. Ord.
re: Change City Income Tax Distribution Formula
      Ordinance No. 086-22, an ordinance to amend Chapter 890 of the Codified Ordinance of the City of Middletown, as amended, to amend Sections 890.01, 890.03, 890.04, 890.05, 890.06, 890.07, 890.09 and 890.13 thereof, to provide that the existing one and one-half percent tax on earnings and income subject to the municipal income tax on and after June 1, 1986 shall be used as determined by the City Commission for the purposes of general municipal operations, capital improvements, and the payment of debt service with respect to capital improvements, and declaring an emergency, was read for the sole purpose of assignment of a number for ballot language presentation.

Res. R86-3
Declare Necessity for Election to
Change City Income Tax Distribution Formula
      Resolution No. R86-3, a resolution declaring the necessity of an election on the question of approving the enactment of an ordinance to amend Chapter 890 of the Codified Ordinance of the City of Middletown, as amended, to provide that the existing one and one-half percent tax on and after June 1, 1986 shall be used as determined by the City Commission for the purposes of general municipal operations, capital improvements, and the payment of debt service with respect to capital improvements and declaring an emergency, was presented.
      Mrs. Schaefer moved the Charter provision requiring reading on two separate days be suspended and that the resolution be declared an emergency measure and reas one time only. Mr. Kaup seconded the motion. Motion carried. Ayes: Messrs, Donham, Kaup, Mrs. Schaefer. Messrs. Shupe, Stone.
      The resolution was read one time only.
      Mrs. Schaefer moved the adoption of Resolution No. R86-3 as an emergency measure. Mr. Stone second the motion.
Discussion
      City Manager Burns informed that in order for the City to have operating funds sufficient for 1987 and 1988 we would have to have additional operating revenues. This year we are making painful cuts – program cuts, lay-offs, City service reductions and cutting our surpluses. The only other alternatives are to raise taxes or charge for services. General Revenue Sharing and other Federal funded programs are dwindling even more and sooner than anticipated. Removal of the tax formula will make available $1 to $2 million for City operations. We will not abandon capital improvements. $500,000 will be used from license fee revenues and Urban M funds will continue. We hope soon to have a five-year capital improvement program for review.

      This legislation needs to be filed right away for the May 6, 1986 ballot. We are hoping to have the ballot language include the word “amendment” so the voters will not be confused on the issue.
     Commissioner Kaup commented that this first came up in 1984 when we found our hands tied with earmarked capital improvements portion of the income tax revenues. We have studied and are now ready to move. Capital Improvements will not be abandoned and the tax will not be increased at this time. This is a good move and removes some of the budget restraints.
     Commissioner Donham acknowledged the difficult financial status of the City. It is hard to lay off employees and cut programs but the State of Ohio does not permit deficit spending by municipalities. The City leaders of the past and Mr. Burns have done a good job. We have had more companies making more profits and employing more people, creating more City revenues in the past. All this has been reduced considerably. We have been fortunate to have gained a great deal of outside funding in the past and these are shrinking rapidly. We must take steps to do all we can to continue to provide all the services we can on our own.
      Chairman Shupe invited public comments. There was none.