City Council Report

By Dottie McGrew

The future is uncertain for the proposed half-percent increase in city income tax. But one thing is sure. Whatever the action is taken will be preceded by talk, a lot of it.

Council is scheduled to start discussing Mayor David Held’s proposal to increase the city income tax from 1.5 percent to 2 percent during the June 4 meeting, which is about five weeks before their traditional six-week summer recess. The Aug. 22 filing deadline for the November ballot falls during the recess.

The mayor presented his case to council on May 21. He said the income tax increase would be the “first step to life after Hoover and one of the most important votes the council would make because it deals with how the city will function in years to come.”

Held painted a dim picture of declining revenue and escalating expenses.

He said the city was “cruising” along in the good years between 1990 and 2001, with Hoover employment bobbing around 2,000 and income tax collections at $6 million to $7 million. Half of the income tax was going to capital improvements. City ordinance only requires 20 percent. The carryover balance of all funds in 2001 was $19.3 million.

Fast forward to the present.

Only a handful of Hoover employees will remain by September. Estimated income tax collection for 2007 is $5.9 million and $5.3 million in 2008. The 2008 figure assumes no income tax from Hoover. The reduced income tax means that less money is earmarked for capital improvements and less money is going into the general fund, a trend that is estimated to lead to a deficit of $265,320 in 2008 and as much as $4.8 million in 2011 if something is not done to increase income tax, Held said.

Held said that although the half-percent income tax hike would restore revenue to the 2000 level, “everything would not be fine and dandy.” He said the city “would be buying time.”

But Pat DeOrio, chair of council’s Finance Committee, took a different view. DeOrio noted that although employment at Hoover dropped sharply, city income tax over the same period declined by only 15 percent. The reason, DeOrio said, is that the community has grown and council has taken an active role in preparing the budget for a worst case scenario.

DeOrio, along with other council members, favors working with neighboring townships
on mutually beneficial economic development to enhance revenue. But, he cautioned, the city must move quickly because the townships could form alliances with the City of Green to the north and the City of Canton on the south. The city’s 1.5 percent income
tax gives North Canton an advantage in competing with Green and Canton, he said.

No council member was ready to endorse the proposed increase. Council President Doug Foltz and At-large Councilman Jim Repace oppose cuts in city personnel. All agreed that dialog with the community is important.

Held said he isn’t asking council to endorse the one-half percent increase. “I just want to get it on the ballot and let the people decide,” he said. “If they say no, then we will make cuts. If they say yes, we will move ahead.”

Held thinks the increase stands a better chance on the November ballot and could be collected in 2008. If the increase would go on the May ballot, the city could not begin collecting the revenue until 2009.

“People do have the right to say how their money is spent,” Ward 4 Councilman Jon Snyder said. “We must be very careful what we do. If this doesn’t go, you only get one bite at the apple.”