“If you take that away, with what the state is doing to us now, we would be crippled. That was our savior,” Springboro Mayor John Agenbroad said.
Effective Jan. 1, Waynesville is expected to impose a 0.5 percent income tax on commuters as well as the local workforce. It would replace a 1 percent tax only collected from local workers.
“We want to compromise,” Waynesville Mayor Dave Stubbs said. “We have really struggled with this.”
American cities turning to fees
Nationwide, 43 percent of cities surveyed by the National League of Cities in 2014 reported increasing fees rather than raising income taxes, while 18 percent said they increased the number of fees, to beef up their treasuries.
“Each year we’re seeing some consistent growth in the use of user fees,” said Christiana McFarland, research director for the National League of Cities, reviewing data collected over the past 29 years.
Traditionally, many U.S. cities have relied on property taxes to raise revenues. In 2014, 22 percent of respondents to the National League of Cities survey chose it. None responding to the survey reported increasing local income tax.
Ohio and Kentucky state law allow cities to levy income taxes, McFarland said. But beyond these boundaries, she said, local income taxes are only levied in large cities: New York and Yonkers in New York, Wilmington in Delaware, Kansas City and St. Louis in Missouri, Baltimore in Maryland.
“It’s very rare that cities can levy an income tax, period,” McFarland said.
Diversifying local income tax collections
Income tax assessed on local workers remains the key revenue generator in most Ohio cities.
In Warren County, Franklin, Middletown, Carlisle, Monroe, Mason, Lebanon and Loveland all offer full credit to residents on income taxes paid where they work.
Springboro credits residents for all but 0.5 percent of its 1.5 percent income tax. South Lebanon, Maineville and Morrow credit residents for half their 1 percent income tax rates.
Springboro City Council reduced the credit 0.5 percent in 2004 after a series of public meetings and after rejecting asking voters for an additional property tax levy.
The school district and fire service relied on property tax levies, which also burdened senior citizens on fixed incomes, Agenbroad said.
Also unlike a levy, the credit reduction can be imposed without voter approval, although it is subject to referendum.
“I don’t ever want to run anything down anyone’s throat,” Agenbroad said. “It was the right thing to do.”
The issue was used by challengers in the ensuing election. Agenbroad and other incumbents won, if only by a narrow margin.
“At the end of the day, we were able to make our case,” Agenbroad said.
The $500,000 a year raised has offset state cuts and helped the city absorb the costs of growth.
“It’s kept Springboro healthy. I don’t know what we would have done otherwise,” Agenbroad said.
Waynesville’s dilemma
Kimberley Kaan was among village council members who had sworn not to impose the 1-percent income tax, which took effect for five years in 2010 after Waynesville voters rejected a referendum repealing it. Since then, they have twice rejected ballot measures to continue it.
But Kaan was among those voting yes on the first reading of the proposed ordinance to continue the 1 percent for the local workforce through the end of the year and begin the twin 0.5 percent taxes for resident commuters and local workers, effective Jan. 1.
“The village needs money to sustain itself,” she said. “The library brings in more revenues than we do. They have more employees than we do.”
Otherwise Waynesville, which recently emerged from an extended state of fiscal emergency, is projected to run out of money sometime next year.
The final vote is expected on May 12.
Councilman Richard Elliott cast the lone vote against on the first reading, although he sees no alternative.
“The tax is totally necessary for the village to survive,” he said. “I’m a big believer in voters’ rights.”
In 2010, Elliott headed the referendum effort. He was unsure if anyone would mount one this time.
“It’s the voters’ right to bankrupt the town, if that’s what they want,” he said. “I believe they are just going to let it pass and say ‘I told you so.’ ”
About the Author
