Committee Pushes Columbus Income Tax Hike

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An economic advisory panel established by Mayor Coleman a year ago has issued its report on the financial condition of the city’s general fund. The panel says Columbus has no choice but to raise the city income tax.

Committee Chairman Robert Howarth was short and to the point:

“With today’s economic realities, our city’s back is now up against the wall,” Howarth said. “And the deficit cannot be solved without new revenues.”

At the top of the committee’s list is passage of up to a half percentage point increase in the city income tax. That would raise $97 million annually, though any increase would have to be approved by voters. Howarth says there’s no other way to bridge the budget shortfall.

“We knew that there was an $80 to $120 million problem and we knew that more cuts weren’t the answer and we knew that by cutting compensation and benefits and through efficiencies we’re never going to get to $80 to $120 million,” he said.

The committee suggested other areas: charging a monthly trash fee that would generate up to $46 million annually; installing speed detectors and additional red light cameras would amount to another $4 million a year.

The last time the city raised income taxes was 27 years ago. But Republican strategist Terry Casey is skeptical of the need for the new taxes, fees and fines. He suggests part of the budget shortfall could be fixed by lowering the benefits city employees receive.

“Maybe you don’t need the tax increase at all and you certainly don’t need a full half a percent,” Casey says. “That would be a 25 percent increase in the municipal income tax which is a lot of money when most people in Columbus are struggling to pay the bills and keep their jobs.”

The Economic Advisory Committee is aware that there are other sources of revenue and places that could be cut. It says that city employees have a generous health care package with a low employee monthly premium. It says employees should pay more of the cost of their health insurance.

The panel sees cost savings in overtime expenses. And the report says that the city pays for all or a portion of the employees’ retirement payments. Committee Chairman Robert Howarth

“The cost of picking up retirement benefits as we do today is $29 million. And that figure needs to be thought through very, very carefully. And if warranted the amount that the city currently pays needs to be phased down for current employees and not picked up for new employees,” Howarth says.

A vote on the income tax measure could come as early as this August. But if it happens then, Republican strategist Terry Casey says he’d be suspicious of the timing.

“I’ve heard that some at City Hall want to do an August special election which would cost tax payers if we’re supposedly so tight for money, about an extra three-quarters of a million dollars just to run a special election in August. And the question is will there really be the awareness in an August special or is that just a trick to sneak it by the voters when they’re not paying attention during that time of the summer.”

Even though only Columbus residents can approve a tax increase, everyone – Columbus resident or not – would see their income taxes raised.

The report is now in the hands of Mayor Coleman and Columbus City Council. Copyright 2009, wosu

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