Northwood City Council on May 27 gave a first reading to proposed ordinances that would increase the income tax rate and establish a trash fee. The measures have two more readings before there is a final vote by council.
Council is giving three readings to give the public time to offer input on the ordinances.
The proposed .25 percent hike in the city income tax would increase the tax rate from 1.5 percent to 1 ¾ percent. It would provide funds for capital improvements, capital reinvestment and operating expenses of the city within the general fund. The increase would bring in $500,000 annually.
If a majority of council approves the tax increase, the measure would go on the ballot, where voters would have the final say.
The $10 per month trash fee would start July 1 and bring in $220,000 annually.
The city currently pays for garbage pickup as part of its contract with Waste Management of Ohio, which owns the Evergreen Recycling and Disposal facility, a solid waste landfill located at Wales Road and East Broadway. Northwood receives 22 cents per ton tipping fee, and 23.75 cents per ton host fee from Evergreen, which automatically deducts a monthly charge for unlimited garbage pickup for residents.
The city has been struggling to avoid a tax increase and trash fee by cutting expenses and laying off workers since income tax revenue started to drop last year as a result of the recession. Personnel cuts made in the general fund total $387,835.
The city income tax revenue so far this year is down 18.4 percent, or $262,771, compared to the same period last year. If revenue remains low by the end of the year, the city would have to cut $824,000 in expenditures from the 2010 budget. A total of $567,828, or 70 percent of that amount, would be in the general fund.
Council recently approved an ordinance that amends the city’s taxation code to eliminate the 10 percent income tax disbursement into the capital replacement fund and reallocate it into the general fund. The move reallocates approximately $300,000-$400,000 annually into the general fund. With the reallocation of the additional 10 percent into the general fund, the city has an estimated year end general fund balance of about $11,007.
Capital replacement expenditures have been frozen, and the $1 million balance will remain in the capital replacement fund to be used only for emergencies.