Vote NO on The Powell City Council Income Tax Increase Proposal

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After hearing from many residents who are against the income tax increase, Council voted last night to send the income tax increase proposal to the ballot this November. The vote was 6-1, and I was the “1” Council member who did not support this proposal. There have been many over the past few months who have written and called Council members, as well as come to the Council meetings, to express that they are against this proposal. Unfortunately, Council did not go back to the drawing board as the vast majority of those who contacted Council requested. Instead, they moved forward on the existing proposal.

Some are saying I have a personal agenda or that I simply do not want taxes increased. Neither is true. I have stated since last fall that I was not concerned about myself, but about the future economic development of the City as well as my strong opposition to what I consider to be a small business tax. In addition, I thoroughly understand that government has its place and function, and that we must have taxes to support the services government provides. In fact, I realize fully that the City does have a funding problem, and that we need money for capital improvements. However, the proposal presented by Council is not one that I can support.
Here are the most important points from the proposal:
  • The proposal DOUBLES the City’s income tax. The income tax would increase from 0.75% to 1.5%.
  • The proposal is NOT equitable. This tax raises the funds for the City in two primary ways: 1) from those who live in Powell and work either in Powell or in an area without an income tax (such as Liberty Township); and 2) those who live outside of Powell but work in Powell. What about the 62% who live in Powell and work elsewhere? They won’t see a tax increase. As one resident put it in the July 20 Council meeting, this pins neighbor against neighbor.
  • 38% of the residents will pay twice the amount in income tax. Only 38% of the residents of Powell will be paying for what the entire City uses, when two communities (Murphy’s neighborhoods and Golf Village) already pay thousands of dollars a year in special tax assessments. Granted, those funds do not go to the City; however, there is a point at which enough is enough with the unfair tax burdens being pushed onto certain sectors of the community rather than the entire population of the City. And, this 38% are primarily small business owners who live and work in Powell. That’s right, of those who live in Powell, the small business owners are the ones who will pay double the income tax. When will government learn that we must stop putting the burden of everything on the backs of our job creators – the small business owners?
  • The tax is NOT permanently tied to capital improvements. Council will tell you that it is tied to capital improvements, but that ordinance expires in ten (10) years. And, the ordinance can be reversed at any time by future Councils (with the support of six (6) Councilmen). When the ordinance is reversed or when it expires, your tax dollars will then go into the general operations budget. If the capital improvements projects are projected to be completed in 20 years, why isn’t this tax tied to capital improvements for 20 years or more? According to Council discussions, this was possible, but not preferred. Even the ballot language says that this is for “general operations and services,” among other things.
  • This tax is permanent. There is no sunset. With bond issues, there is a “sunset” and voters know when the tax will expire. Council’s recommendation, if approved, is permanent.
  • There is no accountability. Council can use the funds for whatever capital improvements it chooses, regardless of whether the voters view it as a top priority.
  • There ARE other options. Council continues to state that they have researched all options and that the current proposal is the best option. This is not the case. I have asked since early this year for the Finance Committee and Council to organize projects into “baskets” of similar capital improvements projects, and present to Council the cost to the voters for individual bond issues for each of the “baskets” created (such as one bond issue for finishing bike baths, another bond issue for repairing roads, etc.). This would mean that the issues could be staggered and sent to the voters when needed, voters would have an up or down choice on each of the baskets of projects (with the ability to vote down the proposal if the voters did not want that project completed), everyone who owns property in Powell would be paying for the capital improvements that benefit the whole city, the taxes would have a “sunset” and be temporary rather than permanent, and the tax would not target a specific sector of the population (such as small businesses). In the meeting minutes from the July 6, 2010 Council meeting, you can confirm that I reminded Council that I had not seen my suggestion in any of the presentations. In addition, I again reminded a Councilman at the meeting on July 20 when he was again restating that all options had been explored. They have not been – the Finance Committee members seem to have determined long ago that this was the structure they preferred (perhaps because they would not be paying any more in taxes themselves). Council and staff never studied and presented my suggestion.
  • This is a horrible time to increase taxes, especially on small businesses. We all know what is going on in the economy. Additional taxes from the federal government are also “coming down the pike,” and we do not even know to what extent yet. In fact, Council discussed in open session that they did not want to wait until next year to place this issue on the ballot because they did not want to ask for another tax after all of the new taxes from healthcare and other measures were effective.
  • We will lose our reputation as a “low tax community.” At 0.75%, we have a very low tax rate that attracts residents and businesses. If we double our income tax rates to be closer to that of other communities, we lose our competitive advantage. While we still may be a little lower, people may choose to go to another community because it is closer to work, they have more amenities (such as more parks, better traffic flow, a recreation center, etc.), or whatever other personal reasons they may have that may have otherwise been set aside if they could only pay 0.75% in taxes rather than 1.5%. Doubling the income tax will have a severe impact on the community.
  • The City is not making enough efforts to cut costs. If you view the recent Delaware Gazette article about salaries in Powell, you will see that they have increased, some by double digit percentages, over the past few years. I voiced concern about this last December, before I took office. In the Council meeting last night, other Councilmen confirmed that they do not plan to cut back because it will not raise the funds needed for the City for capital improvements. Of course, that is true; however, it is an ethical and moral dilemma to continue giving government employees, who are paid with your tax dollars and mine, salary increases year after year when the private sector is cutting back on salaries, laying people off, requiring days off without pay, and taking other drastic measures. We had the opportunity recently as Council to leave a few open positions vacant, and the other members decided to fill one of the positions now, another one this fall and leave only one vacant. If it were the private sector, there would not have even been a discussion – the positions would have been left vacant!
  • There are credits and reciprocity issues. Council will tell you that if you live in Powell and work in another city with an income tax, such as Columbus, that you will not pay more in taxes due to the system of credits that cities use. With the possibility of the State of Ohio no longer funding local government in order for the State to balance its budget, what happens if the system of credits and reciprocity goes away so that cities can have more money? Then, all residents in the City of Powell would be paying 1.5%. Council is assuming that the system, which Council cannot control, will remain as is. That is a foolish assumption in this day and age, considering the drastic measures that the State of Ohio will have to take in order to fill a budget gap of at least $8 billion.
For all of these reasons above, I do not support the Council’s proposal. I hope that you will share this information with those you know who live within the City of Powell, and be sure to vote “no” on November 2, 2010.
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