Tight finances are forcing Oak Harbor Village Council to consider possible elimination or reduction of the village’s income tax credit.
Currently, the village collects a 1 percent income tax from village residents who live and work in the village. People who live in the village but work in communities where another tax is collected are exempt from the tax
The income tax dates back to 1971 and, last year brought in a little more than $680,000, according to tax administrator Kim Mehlow.
The village, however, continues to struggle to keep its finances in the black as major projects such as a combined overflow sewer system revamp and other utility line replacements loom. As a result, leaders are exploring a number of ways increasing revenues to offset expenses.
Councilman Don Douglas, head of the finance committee, has suggested it’s time council reconsider the income tax credit. That is, those residents now exempt from the tax could possibly be responsible for paying all or a portion of the tax.
“I want to paint a clear picture,” Douglas said. He offered three possible options: Hiking the tax rate, eliminating the tax credit or reducing the amount of the credit.
Eliminating the tax credit completely would mean an additional $166,000 annually, fiscal officer Debbie Carpenter said.
How many people a tax change would affect was not known.
Councilman Jim Seaman isn’t opposed to a possible tax credit change, he said. “But,” he added, “We need to be diligent in making cuts before we put more burden on village residents. Last appropriations, we had no cuts.”
“You’re right,” Douglas replied. “This year, the only thing we did was approve a $20,000 increase in health insurance costs.”
Council entertains the final reading of the 2014 permanent appropriations at its March 17 meeting. The legislation calls for about $11 million in total appropriations, with $1.8 million for daily operations and salaries.
To fend off budget problems for now, Carpenter and Interim administrator Randy Genzman scrutinize expense requests together on daily basis.
“Randy has turned a lot of requests down,” Carpenter said.
Village solicitor Jim Barney cautioned that any revisions would not provide immediate relief. Changes cannot be retroactive, he explained. He also noted he had spoke to Mehlow regarding complications involved in trying to set up half year and quarter year collections.
Realistically, Barney said, legislation changes passed this year would take effect in January 2015. Collections would begin in 2016.
Council decided to hold off on a decision until more information can be collected.
Seaman emphasized there was no reason to rush to a decision without weighing all the facts.
“Even if we do it today, we don’t see any cash until 2016.”
“Everything moves slow here,” Councilman Jon Fickert countered. “That’s nothing new.”
Area landlord Adam Snyder asked if the village had considered annexing other properties to help bring more revenue into the village in a variety of ways.
“It’s a consent issue,” Barney said. “The people have to want to be in the village.”
Mayor Bill Eberle explained that annexations also had to involve parcels immediately adjacent to village corporations limits.
“You can’t jump over a piece of land,” he added, noting some subdivision residents who have expressed interest in the past.