City officials here will update local income-tax forms in anticipation of collecting — for the first time — 0.5 percent of earnings from residents living in Lebanon who also pay income tax where they work.
In August, the city council voted 5-2 to halve the full credit, while continuing to collect a 1-percent tax from people who work in Lebanon, joining cities around the state choosing this alternative to raising the income-tax rate to replenish city coffers.
The credit can be reduced without voter approval.
Lebanon is the sixth Warren County community to reduce its income-tax credit.
Among Warren County cities, only Loveland, most of which is in Hamilton and Clermont counties, will continue to have a 1-percent income tax and fully credit residents for income taxes paid elsewhere.
Among municipalities in the county, income-tax rates vary from 2 percent to 0.5 percent, while credits range from full to 0.5 percent.
Elsewhere in the Miami Valley, Clayton in Montgomery County halved its tax credit, starting this year. West Milton in Miami County did away with its credit last year, while Brookville cut its credit in June.
“You’re one of many that are considering the credit reduction,” resident Krista Wyatt said on Aug. 23 before the council vote.
For every $100,000 of income, residents will pay $500 to Lebanon, as well as additional tax based on whatever rate is assessed in the city or village where they work.
The vote follows a dozen years of debate and five elections in which local voters rejected additional property tax or income-tax hikes to pay for road repairs.
Meanwhile, officials say annual deficits of $1.5 million for road repairs leave the city with potholes and bills six to seven times as large for reconstruction of roads too badly worn to patch.
City Manager Pat Clements’ presentation explained how Lebanon, like bedroom communities around the state, has suffered from cuts in state funding. He also pointed out the city has collected less due to reduced property values and cut staff to offset the revenue cuts.
Council members Mark Messer and Wendy Monroe joined residents who urged the council not to reduce the credit during the meeting and in emails to city hall.
“I don’t know if I can pay another 0.5 percent,” long-time resident Daphne Shelton said at the meeting.
Messer predicted local voters would seek to repeal the change.
But the majority of council approved the reduction, along with measures designed to earmark the added revenue for road repairs and require an annual review of its continued need.
“I would love to reverse the reduction of the credit one day,” Councilman Jim Dearie said.
Councilman Jeff Aylor said the change would end an era when 75 percent of residents filed local tax forms including no payment.
City Auditor Sharee Dick said staff was working on the 2016 income-tax forms, due next April, and residents would be adequately warned of the change in upcoming newsletters.
Warren County Income Tax Rates
City Rate (%) Credit
Franklin 2 Full
Middletown 1.75 Full
Carlisle 1.5 Full
Monroe 1.5 Full
Springboro 1.5 1 percent
Mason 1.12 Full
South Lebanon 1 .5
Morrow 1 .5
Maineville 1 .5
Lebanon 1 .5
Waynesville .5 No
Loveland 1 Full