Voters here will be asked to approve a 0.25 percent, five-year, renewable income tax increase on the May 7 ballot.

If passed, it would increase West Carrollton’s income tax rate from 2.0 to 2.25. That new rate would be the same as Dayton, Miamisburg, Kettering and Trotwood, but higher than Riverside (1.5), Centerville (1.75 percent) and Vandalia (2.0).

The new tax rate, which is expected to generate $600,000 annually, is intended to offset revenue lost in 2012 through state budget cuts ($330,000) and the elimination of 330 jobs at Appleton Papers Inc. ($340,000).

“We’ve been battling really for a decade and had losses with other businesses, and are just trying to concentrate on what’s happened here recently,” said Tom Reilly, West Carrollton finance director. “We’ve already made cuts, but we’re into the muscle and bone now; there’s not any fat.”

This increase would not affect retirees, residents receiving unemployment or disability, or residents working in cities with the same or higher income tax.

The tax would represent an increase of about $100 per year or $8 per month for those with a $40,000 income. It would affect residents working in West Carrollton or residents working in a city with a lower income tax rate.

According to recent tax data, about 40 percent of the city’s residents would be affected.

City officials said the only other options for increasing revenue are reducing the credit given to residents for income taxes paid to other cities, or the city could try to pass a property tax.

“However, both of those options would have a greater negative impact on more of our residents,” said Brad Townsend, city manager. “That’s why we are pursuing this quarter percent increase.”

West Carrollton city employees have not received cost of living increases for four years and began paying 3 percent more in insurance premiums in 2012. In the past three years, five full-time city positions have been eliminated and six positions have been reduced to part-time.

The city plans to use approximately $330,000 in reserve funds to balance the 2013 budget. If no changes are made to improve revenue, Reilly said the city will face a severe cash flow problem by 2016.

According to West Carrollton’s 2013 budget, the city spent $7.4 million in 2012 and expects to spend $7.5 million in 2013. The increase was attributed to inflation.

“Our budget is now at nearly the same level as it was in 2007,” Townsend said. “If the increase is not approved, there is no doubt that city services will be affected.”

This potential income tax rate increase is renewable, meaning that if it is approved in May it would have to go back before voters in five years to continue.

“We do have some potential economic development with Exit 47 that we hope can alleviate some of the stress from the state cuts,” Reilly said. “If we don’t have the need (in five years), then we won’t put it back on the ballot.”