[ back ]
Citizens get dueling letters on income-tax vote
(by Sali McSherry - July 14, 2010)
Citizens get dueling letters on income-tax vote
By SALI McSHERRY
Several Pepper Pike citizens for and against the proposed income-tax increase on the Aug. 3 ballot, have been writing letters to residents voicing their concerns.
Since the budget crisis surfaced at the end of last year, citizens have questioned why the city had counted on estate-tax revenue to cover shortfalls and in public meetings over the last several months have stressed the importance of not relying on that revenue in the future.
Not everyone agrees. Resident and businessman Jim LeMay told citizens in a citywide mailing that Pepper Pike's tax collections have "greatly exceeded forecasts," making any tax increase unnecessary.
However, residents Jim Doyle, Charles Jarrett, Don Jacobson and Tim Winings wrote a letter to citizens in response to Mr. LeMay. They said that while estate-tax revenues are up this year, there is no guarantee what they will be next year. They work in financial management and business and are members of the city's long-range strategic planning committee.
Last year, the city received about $434,000 in inheritance-tax revenue, down from $2.75 million the previous year. The city budgeted about $545,000 this year and so far has collected over $1.3 million.
The city is asking residents to approve a 0.5 percent income-tax increase that would end after five years. It would generate about $2.2 million a year, about $1 million less than a 0.75 percent increase council previously considered.
Currently, Pepper Pike has a 1 percent income tax with a 50 percent credit to residents who work outside the city. Based on an annual income of $75,000 for residents who work in any community with a 1.5 percent or more income-tax rate, the cost would be $62.50 per month, compared to the current $31.25 per month, according to the Citizens for Pepper Pike campaign committee. The special election is Aug. 3. Early voting began June 30.
An additional income tax is a good solution for the city, according to Mr. Doyle, Mr. Jarrett, Mr. Jacobson and Mr. Winings, and "provides a reliable, sustainable way to pay for the services we value."
It also would keep the city in the lowest one-third of Cuyahoga County communities in terms of tax rate. For the long-term health of the city, it would be irresponsible to rely on estate taxes, as the city has done for the past 40 years, they said.
But Mr. LeMay said strong estate-tax collections mean there is no need for a new tax, and, according to his estimates, the city will see a cash surplus at the end of the year. The city's financial crisis was caused by poor planning and excessive spending over a number of years, he said.
According to proponents of the tax, the city this year drastically has cut costs, including a temporary 25 percent pay cut for employees, a halt to the city's annual road-maintenance program and no capital purchases. The city has vowed to cut personnel costs by 10 percent for the next several years, they said.
Mr. LeMay said he's concerned that cash from the new tax would eliminate any incentive to reform.
The income tax rate has remained unchanged since 1971 and an increase would hold the city and mayor accountable, proponents said, because it would expire in five years.
Another charter amendment citizens will vote on would create three significant reforms, Mr. Doyle, Mr. Jarrett, Mr. Jacobson and Mr. Winings said. First, it would require the mayor to deliver to council the city budget 45 days before the end of the year. Second, it would require a five-year budget forecast to be submitted at the same time and would require the mayor to create an annual financial report 120 days after the start of the new year.
Mr. LeMay said he also is concerned that the added tax could damage the city's business tax base, because Pepper Pike is a "low-tax city," and that has helped attract businesses.
Beyond that, he said, the city has not pursued significant opportunities for cost savings through regionalism and other initiatives.
While the city has been exploring those avenues, it requires long-term coordination and is not a quick financial fix, Mr. Doyle, Mr. Jarrett, Mr. Jacobson and Mr. Winings said.
[ back ]
