Northwood voters on Tuesday will decide whether to approve a .25 increase in the municipal income tax.
The income tax rate, currently at 1.5 percent, would increase to 1.75 percent if the measure is approved.
City officials in the last year have made drastic cuts in personnel and services as a result of a reduction of income tax revenue collected due to the poor economy.
Council during the summer debated the need for a tax increase, as well as other options, including charging residents for refuse collection, and reducing or eliminating tax credits to residents who work outside the city.
Council several weeks ago rejected the latter two options, and approved placing the 25 percent municipal income tax increase for three years on Tuesday’s ballot. The revenue would provide funds for capital improvements, capital reinvestment and operating expenses.
Mayor Mark Stoner told The Press last week that choosing to place the measure on the ballot was the better option because it allows residents to decide whether to contribute more payroll taxes instead of the alternatives of more budget cuts, paying a refuse collection fee, or having tax credits reduced or eliminated. Council has the authority to bill residents for refuse collection and eliminate or reduce the tax credit.
“This is totally up to the residents. Let them decide. That is the only proper way to do it,” Stoner said of the ballot measure.
“We are down in the general fund, and down on capital improvement and capital replacement,” said Stoner. If voters approve of the tax increase, the city will use the revenue to replenish the budget.
“After we do that, and have a bigger carryover balance in the budget, then we will be able to potentially start bringing back some of the people who were laid off,” said Stoner.
“On the flip side, if it does not pass, then we will do what we continue to do – make more budget cuts,” said Stoner.
The city has had a bit of good news in the last few months. Income tax collections are slightly up after months of decline. Stoner announced at a recent council meeting that income tax collections for the year had increased by 2.6 percent compared to the same period last year, and that there was an estimated year end general fund balance of $500,000. And in September, it was announced that Norplas Industries, Inc., a tier one manufacturer of injection molded and painted automotive exterior parts, will expand its existing building on Caple Blvd. and create up to 300 jobs over a three year period.
“If the economy stays like it is, we’re still going to be able to do what we’ve done so far. We’ve done everything we could not to impact the services for our residents,” said Stoner. “That was my goal. It’s not the residents’ fault the economy took a dive. I wanted to make sure we kept up with police, fire, streets, plowing, leaf pickup, brush pick up - everything we could so it’s minimized on the residents. If it does not pass, and things stay the same, then we will get by. If things would go bad again, then we’ll have to make some cuts that will impact the residents.”
Councilman Dave Gallaher agreed.
“We’ve already cut a tremendous amount from the budget, and we’re still not even. We have next year to deal with, too. It’s getting to the point where the cuts are going to have a direct effect on the way we live in the city,” he said.
“To put this question to voters, for me, was easy,” Gallaher said of the proposed income tax increase. “It gives them a chance to be involved.”