Dayton city officials expect to place an income tax renewal levy on the May 6 ballot, aiming to keep the city’s tax rate at 2.25 percent, according to Mayor Nan Whaley.
Dayton’s income tax rate has been 2.25 percent since 1984. The first 1.75 percent is permanent, but the final 0.5 percent requires periodic approval, which voters have overwhelmingly given in 1990, 1994, 2000 and 2006.
That 0.5 percent tax expires on Dec. 31, 2014, and rather than asking for another six- or eight-year renewal, Whaley said the city will ask residents to make it permanent.
That portion accounts for more than $22 million in city revenue, or 14 percent of the general fund, making it crucial to maintaining city services.
“I feel really confident. We don’t take anything for granted, but we have a good story to tell,” Whaley said about the likelihood of the measure passing. “Through a really tough recession, we still were able to provide strong police, fire, recycling and trash services. And that income tax is key for us to continue to provide quality services.”
As with all municipal income taxes in Ohio, people who work in the city pay the tax, regardless of where they live. But only city residents are eligible to vote on the tax.
Dayton residents who work outside the city and pay less than 2.25 percent in local taxes to another jurisdiction, must pay Dayton the difference, so they end up paying 2.25 percent total.
Dayton tax administrator Bejoy John said Monday he could not estimate what percentage of city income tax receipts come from city residents, versus nonresidents.
Barbara LaBrier, the city’s director of management and budget, said Dayton projects it will receive $102.7 million in income tax receipts in 2014 as part of a $155.4 million general fund budget. That means the income tax makes up roughly two-thirds of the general fund.
City Commissioners and top city staff discussed Dayton’s budget and income tax at a retreat Friday night and Saturday near Cincinnati. Planning documents for that retreat said city leaders would consider whether to ask for an income tax increase, given years of budget cuts and the need to make capital improvements in roads, equipment and other areas.
“I can tell you that when that came up, just listening to the conversation, I thought the consensus was that (going to) 2.5 percent would be the last resort,” City Commissioner Joey Williams said. “There’s a real question of would the community support that, and is it the right thing to do.”
Williams, who heard from scores of residents as he campaigned for re-election last year, said the community does not want an increase in the tax burden. He said city officials continue to hope that a recovering economy will boost Dayton’s finances, but in the meantime, they budget conservatively.
The city thought it would have to dip into its reserves in 2013, but a combination of expense control and one-time revenue meant they didn’t have to.
John said the city’s income tax mainly applies to two classes of income – wages and net business profits. He said pensions, social security, unemployment benefits, interest income and other categories are not subject to city tax.
During last year’s election, mayoral candidate A.J. Wagner criticized city officials for taking away an annual $50 senior citizen property tax credit that had been packaged with income tax renewal votes in recent decades.
The 2000 and 2006 income tax renewals passed with more than 80 percent support, although turnout was very low. Wagner said ending the $50 credit might hurt the city’s chances of getting the income tax renewal passed.
Whaley on Monday called that “a manufactured crisis,” saying she had only heard that view from Wagner and one of his supporters. She added that she thinks seniors appreciate their city services.
City Commission likely will vote on the income tax renewal in the next two weeks, as Feb. 5 is the deadline to present a May ballot issue to the Board of Elections.