Tuesday, February 16, 2010

Trading one tax increase for another

Today at Toledo City Council, Mayor Mike Bell said he no longer wants to put a .25% payroll income tax increase on the ballot. Instead, he wants to eliminate the reciprocity for Toledoans who work outside the city.

Currently, people who live in Toledo but work in another jurisdiction get credit on their Toledo income tax for what they pay to the other jurisdiction. Under Bell's proposal, those individuals would pay whatever is charged to them in the other jurisdiction and 100% of what is due to Toledo.

Additionally, he still wants permission from the voters to have complete control over how the .75% payroll income tax is distributed. Under current law, collections from that tax are split between the general fund (for police and fire and other daily operations) and the Capital Improvements Fund. The proposal to go before the voters would give the mayor and council the authority to decide how to allocate those dollars.

Last year, voters rejected Council's "Safety First" proposal to reallocate the income tax dollars. I sincerely hope the voters stand by their prior position that draining the CIP isn't the right way to run a city and reject this latest proposal as well.

Bell would also delay the scheduled reductions in the 'trash tax,' keeping them at the current rates, eliminate the Fourth of July fireworks, eliminate waivers for festival fees and implement a new entertainment tax.

In effect, he's trading one type of tax increase for another.

He still wants to eliminate all pension pickups for city employees and have them pay 20% of their health-care costs, but he has removed the 10% pay cuts from discussion.

The problem is that these items would address the 2010 budget deficit, but still do not address the more than $12 million carryover deficit from 2009.

I applaud him for the cuts he wants to make, but cannot support any increase in collections for the city - and especially oppose giving Toledo politicians the ability to determine how the .75% payroll income tax is allocated. If they get that authority, I don't believe we'll ever see those dollars going into the CIP in the future due to their reputation for spending every penny they have - and then some.

Bell's letter to Council, along with budget data, is viewable here.

Here is the press release from the Mayor's office:

Mayor Asks Council to Pull Ordinance Authorizing Tax Increase

At this afternoon's City Council Committee of the Whole meeting, Mayor Michael P. Bell recommended to members of Council that the proposed ordinance authorizing a ballot initiative to increase the city income tax be pulled from the agenda. The administration has made numerous other recommendations to resolve the 2010 deficit without increasing the income tax.

Among the items outlined in the plan sent to members of council and leaders of the collective bargaining units are a proposal to add positions to the law, finance and taxation department to pursue delinquent tax collections, negotiate vendor contracts and provide additional budget analysis for long term fiscal changes. Additionally, it eliminates the July 4th fireworks, assumes elimination of pension pickups and 20% employee contribution for health insurance for all employees in all funds. It does not include a 10% wage concession from employees. Further, the balanced budget would require sale of assets, delaying the recycling fee reductions, elimination of festival fee waivers, implementation of an events tax and would change the tax code to eliminate the 100% reciprocity for those working outside of the city of Toledo.

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