The Ottawa County Commissioners have renewed an additional 0.25 percent sales tax and are now hoping it sticks.
The board held two public meetings prior to approving the additional sales tax on Feb. 28.
The addition leaves the current collection at 6.75 percent locally. That means the sales tax would cost a person 25 cents per $100 spent in goods and services purchases, excluding groceries and fuel. The resolution becomes official 30 days afterward. Collection begins July 1.
And therein is the hitch. The commissioners still don’t know if the state will end up squelching the sales tax’s enactment.
Gov. John Kasich wants a ban on new sales taxes introduced by local goverments for three years. The state’s yearly fiscal budget ends June 30 and the new budget begins July 1. His proposal also includes a rollback of the state’s current 5.5 percent sales tax to 5 percent. At that same time, the governor proposes to broaden the amount of items subject to sales tax, which is being disputed by a number of organizations.
“All the people we have talked to at the commissioners association aren’t sure what effect the state budget will have for sure on counties,” said Commissioner Jo Ellen Regal, president of the board of commissioners.
One thing is sure. If the Kasich proposal goes through, it will nullify the commissioners’ decision. “This makes it really difficult,” Regal said.
In exchange for the ban on new sales taxes, the proposed state budget includes a 10 percent guarantee of each county’s sales tax for two years and 5 percent for the third year.
Commissioners first introduced the tax as an emergency three years ago to help a budget hit hard by a bad economy, decreasing house values and state aid cuts.
The tax has brought in about $3 million over the course of its life, Dennis Jensen, county administrator, said.
But there are two key differences in the newly approved tax.
First, the new tax is continuing, or a permanent tax, compared to the three-year life of the first tax.
Second, this resolution’s approval was not unanimous. Commissioners Steve Arndt and Jim Sass were among the board that approved the first tax. Regal replaced former commissioner Mark Stahl, who also sat on the board at the time of the first vote.
But this time around, Arndt opposed the new tax. Regal and Sass voted yes.
Arndt said he believes the permanent tax should be taken to a public vote. He said the sales tax had become a campaign issue and the issue of it becoming permanent came up again at public hearings.
“People said if it was a temporary tax they did not have a problem. But if it was to be permanent, they wanted it to go to a vote,” Arndt said.
He added the 2013 county budget has already been settled and that the bottom line took into account the possibility of the sales tax falling off the books.
“We had time to wait to see how this all shakes out at the state and then re-evaluate it,” Arndt said. “And we don’t know what legal authority the state has to set sales tax for counties and other municipalities. That is something that is being looked at.”
But Regal said taking the issue to the voters would have required the former commissioners’ board to act last year and put the tax question on the November 2012 ballot.
Waiting now would cost up to $900,000 in new revenue, she said.
Commissioners have been to several organizations to pitch their renewal plan.
The county’s general fund has taken several hits, they say in a report:
• Low interest rates – interest income is down 88 percent from 2007
• Jobs and Family Services funding is down $2.3 million (42 percent) from 2006 to 2012 and the number of employees are down 21 (36 percent) for the same period, while caseload has increased significantly.
• Declining property values – property tax is second largest county revenue at 23 percent of total revenues
• Increasing health insurance costs and regulations
The state has also chiseled away at funding by lopping off significant cash from funds such as public utility reimbursements, local government funds and tangible personal property taxes, Regal said.
Ottawa County Common Pleas Court Judge Bruce Winters said changes in felony cases reflect the state’s austerity measures. About 94 percent of those convicted in his court cannot be sent to state prisons anymore. So they either end up in the county jail or need to be monitored some other way – all costing the county dollars.
The commissioners note that Ottawa County has the fourth lowest effective property rate of all 88 counties and that there are no levied mills supporting the general fund. Ottawa County’s sales tax is also competitive with the surrounding counties which range from 6.5 percent to 7 percent, the state allowed maximum, they said.
“This isn’t going to give a big boost but we will be able to maintain,” Regal said of the extra quarter percent tax.
She county officials will continue to look at any cost-saving measures and shared government programs to help reduce spending. Since 2009, the county has eliminated 27.5 full-time positions. Non-union county employees under the commissioners’ office haven’t received raises in five years and the county’s Fraternal Order of Police union employees agreed to no pay raises for the last two years.
Still, should things start to look up and the county has a good year and revenues increase, there’s always the option of possibly rolling back inside millage to lighten the load on taxpayers, she said.
“I know people are skeptical. I know people get frustrated with county government, all government,” Regal said. “But we have a really good group of people here, department heads and staff, who want to keep expenses down and are working to do that.”