City seeks temporary income tax increase
EAST LIVERPOOL — Hoping to keep financially afloat while waiting for the upturn expected from some new economic development projects, city officials are asking voters to approve a temporary .5 percent increase to the current 1.5 percent income tax rate.
In recently proposing the increase, Mayor Ryan Stovall said city finances are in the red with a $61,000 deficit expected at year’s end, although Auditor Marilyn Bosco more recently has said she now expects a small carryover of about $13,000. Stovall has pointed out city services have been “cut to the bare minimum,” and predicted that, without an increase, some services could be lost completely.
Stovall has said the city is potentially facing a prosperous time with construction of a new Shell cracker plant in Monaca, Pa., saying many suppliers will be looking for locations in this area. He said, however, without adequate police, fire and other services, the city could be overlooked.
Officials are requesting only a five-year increase due to several projects currently underway in the city, including construction of the Market Street Lofts workforce housing, New Castle School of Trades vocational school, renovation of the former East Liverpool Motor Lodge into a health care facility and a proposed electric car assembly plant on the Riverview Florist property, all of which will generate additional tax revenue.
In addition, Stovall said his administration plans to continue its aggressive approach to recruiting new industry to the city.
“The city’s current cash flow problem is a temporary one, and we are seeking a temporary solution. It doesn’t make good business sense to solve temporary problems with a permanent solution,” Stovall said in proposing the five-year income tax increase.
If approved by voters, the .5 percent increase would generate an estimated $700,000 annually each of the five years.
As an example of what the increase would cost, someone employed in the city who earns $25,000 annually would pay an additional $125 annually in income tax, while someone working in the city who earns $50,000 annually would pay an additional $250 per year.
A person living in East Liverpool and working somewhere else in Ohio, paying a tax of 2 percent or greater would see no additional tax.
One issue that might arise in the event the tax is passed is a clause negotiated in some of the most recent employees’ contracts which calls for a wage reopener and possible wage hike if tax collections during 2015 and 2016 exceed 2014 collections by 5 percent or more. In that case, wage reopeners are included in the contracts for the fire department and AFSCME workers, with non-union workers also in line for a one-time bonus if council chooses. Police and dispatchers do not have the same clause in their contracts at this time, according to Auditor Marilyn Bosco. Officials said that, while this provision would prompt discussion in the event collections exceed the 5 percent, there is no guarantee of a wage increase.
If the income tax increase is approved by voters, $49,000 annually would be held in cash reserves, which would allow the buildup of cash for emergency purposes.
The additional revenue would be earmarked for a variety of uses in the city, including two additional police officers, a dedicated DARE officer in the schools and part-time officer on the county drug task force, matching grant money for body cams for police officers, hiring of part-time firefighters to augment the full-time roster, possibly hiring a fire inspector, replacing outdated fire equipment and additional training in both departments, road patching and repairs, storm sewer replacement, equipment repair and maintenance, a part-time inspector in the housing department, demolition of blighted properties, a part-time tax department employee to pursue delinquent accounts, and many other upgrades, training and equipment for various departments.
City officials have pledged that no new levies will be proposed during the life of the temporary income tax, if it is passed by voters.