As a citizen and the Mayor of Urbana, I am not one normally in favor of raising taxes; however, over the past 7 years, we have seen continued reductions in funding from our state government while also seeing increasing costs and demand for safety services.
According to local records, the City of Urbana’s income tax was a flat one percent (1%) from 1957 through 1991. In the early 1990’s it became apparent that the City could no longer provide the level of service the citizens of Urbana expected or deserved at its then current level. In 1991, after significant study, Urbana City Administration and Urbana City Council agreed that the most beneficial way to bolster its service to the community was to make a concerted effort to enhance the safety services divisions, its Police and Fire divisions. The decision was made to request an additional tax of four-tenths of one-percent (.4%) to the then current one-percent (1%), which would bring the new income tax rate to one and four-tenths of one-percent (1.4%).
Now, after 27 years of rising operating costs and continual reductions in the State of Ohio’s ‘Local Government Funding’ (LGF) the financial base for City operations is gradually eroding to critical levels. Simply stated: “It is again apparent that the city cannot keep up with the increasing demands on our safety services divisions, while still working to maintain and improve critical infrastructure.” The answer: place the City’s first income tax increase since 1992 before the voters.
Many of you have asked, what exactly will that mean to me? What will I gain? What will it cost me? In an attempt to answer some of the obvious issues, the following list of Frequently Asked Questions (FAQs) was established. If after reading through this list, you are still in doubt as to whether the increase is necessary, I invite you to call your Council Representative or my office to help explain any concerns.
Q: What does ‘Earned Income’ mean?
A: Unlike property taxes, ‘Earned Income’ includes wages, salaries and other commissions earned in the City of Urbana, and does not include pensions, social security benefits, investment income, unemployment benefits, disability benefits or active duty military pay.
Q: To confirm, including the proposed additional rate increase of .6%, the total income tax will be 2%, correct?
A: Yes, the increase you will be voting on is six-tenths of one-percent (.6%); added to the existing 1.4%, will bring the total income tax to two-percent (2.0%).
Q: What if I, as a resident, work in another city?
A: City residents working in another city receive a dollar-to-dollar Urbana city income tax credit for 100% of income taxes paid to another city, up to 1.00%. The City will continue to recognize up to a 1% credit for income tax paid to their “work city”.
Q: How will this new additional tax be spent?
A: The additional tax will be used specifically for Police and Fire operations and equipment.
Q: What is the financial impact of the City’s Safety Services on the City’s annual budget? What percentage of the City’s budget is needed to support these services?
A: Of the 2018 General Fund expected revenue of $6.54M, $3.47M is allocated to Safety Services (Police @ $1.59M and Fire @ $1.88M), which leaves $3.07M to operate all the remaining divisions from the General Fund. Combined, the Safety Services divisions account for approximately 53% of the City’s annual budget, with Police accounting for 24% and Fire 29%.
Q: Why can’t the City just operate with the funds they have?
A: The City respects and understands the expectations of the community to be good stewards of public funds, and for the past 25 years we have been prudent to operate within our means. Just like the individual budgets at home, the vast majority of city funds are spent on basic, recurring, and necessary operating expenses, with very little, if any leftover funds for discretionary projects. The 2018 annual budget is projected to have a positive balance of $1,625.00, which doesn’t allow for expansion of Safety Services.
Q: When will the additional income tax rate take effect?
A: Once approved by the citizens of Urbana at the November 6, 2018 election, the new rate will take effect on January 1, 2019.
Remember, if you have any questions on the additional .6% tax increase, please don’t hesitate to contact myself; the Director of Administration Kerry Brugger; the Director of Finance Chris Boettcher; or any City Council member. You can find the directory and additional information on the Urbana City income tax levy at www.urbanaohio.com.