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South Russell plans higher income tax
(by Joan Demirjian - June 30, 2010)
South Russell plans higher income tax
By JOAN DEMIRJIAN
South Russell Village's income tax has been set at 1 percent for more than 40 years. It was first established in 1969, and it has remained at 1 percent ever since.
Now, Village Council is looking at an increase to 1.25 percent. Voters will have the final say.
Residents and people who work within the village pay the income tax. Village residents who work in a community that collects an income tax receive a 0.75 percent credit from the village.
On Monday, council and Mayor Matt Brett met and held the second reading of the proposal to increase the tax on earned income. After the third reading at their July meeting, council members will vote on whether to place the issue on the Nov. 2 ballot.
"We had talked about modifying the credit, but if we are asking for more money, it is required by law to go to the voter," Councilman Jack Binder said.
Those on fixed incomes and pension plans should not be affected by the tax, Mr. Binder, who is a member of the village finance committee, said.
The income tax generated just over $1 million in 2009 for the village, according to Fiscal Officer Danielle Romanowski. The revenue from the tax go for operations. Village expenses for 2011 are estimated at $2.8 million.
The village also has two safety levies and one operating levy.
Mr. Brett said they have operated the village under the premise that "we look for our expenditures not to exceed our revenues. And we try not to use inheritance taxes and cash reserves to operate the village."
However, revenues have stayed flat or have been reduced, and the village has made some difficult decisions to trim in certain areas, he said.
As an example, he said, the village had identified a 1989 one-ton dump truck in the service department to be placed on the budget for replacement in previous years. However, it was never purchased.
"And once again it was cut in 2010," Mr. Brett said. "It is a vehicle we drive every day, but instead of replacing it, we refurbished.
"It's an example of trying to operate in a conservative manner, but we have run out of options of what we can cut without changing the core or strategic offerings of the village," Mr. Brett said, noting the number of officers on the roads and other services offered to residents.
"We take pride in highly maintained roads, through road programs or plowing in the winter," he said. "If this were not to pass, we might have to reduce the time plowing or amount of salt we use." But the goal is not to make cuts in those areas, Mr. Brett said.
"Our revenue model is split between income and property taxes," he said.
As they reviewed what needs to be done to address the situation, property taxes were considered. They are still some of the lowest in the area, "but all things considered, it's a high property tax rate. And with the idea that the school district will probably come out with some sort of levy, driving them higher, we thought the most palatable solution was to effect the income tax," Mr. Brett said.
"We have experienced a decrease and flattening of the income tax," Mr. Brett said.
Property taxes have remained level, and the village is attempting to keep expenses level as well. Council approved salary freezes for village employees in 2010 and no road programs were planned.
Mr. Brett said they have spent time with the fiscal auditor on the budget, and making further cuts would change the strategy of the village. "We didn't think it was the right move," Mr. Brett said.
Mr. Binder said council and the mayor are re-evaluating the way the village is funded.
They chose not to go with an increase in real estate taxes because people already are strapped financially, he said.
Property taxes have gone up significantly in the Chagrin Falls School District, and they did not want to put a burden on those on fixed incomes, Mr. Binder said.
"The village's current 1 percent income tax is one of the lowest in the area, and with the three-quarters percent tax credit, we have the lowest net effect income tax rate in the Chagrin Valley and the Chagrin Falls School District," he said.
"It speaks to how we've managed in a stagnant economy," Mr. Binder said.
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