Wednesday, May 26th, 2010
By William Kincaid
City likely to seek tax in fall
Revenue needed for general fund
CELINA - Most of city council is on board to gain revenue by asking voters to increase income or property taxes.
All council members at a meeting Tuesday agreed that something must be placed on the November election ballot. Councilman Jeff Larmore was absent from the meeting.
They also learned that time is running out, as the deadline for getting an issue on the ballot is Aug. 19. A decision about what type of issue, three readings of an ordinance and a campaign to educate the public of its necessity all must be done soon, they said.
The city's current income tax of 1 percent - one of the lowest in the area - has remained unchanged since the early 1980s. Forty-one percent of the general fund's revenue is generated from income tax, and as of April 30, the collection was down $86,621 from the same time last year.
Voters rejected the city's last attempt to increase the income tax by a half percent in 2004.
Celina Safety Service Director Rick Bachelor said a half percent income tax increase would bring in an additional $1.5 million a year. To generate that same amount through a property tax, 8 to 9 mills would have to be approved by voters, which Bachelor said would be a pretty heavy tax.
Currently, for every $100 of real estate tax paid by residents, the city only gets $4.78, as 72 percent of the tax goes to Celina City Schools through the 39.3 mills approved by school district voters.
Bachelor also pointed out that only the state and counties, not municipalities, have the power to add or change sales tax through an election.
Councilman Mike Sovinski talked about the option of increasing both the property and income tax to generate the same amount that a half percent income tax hike would bring in.
"We talked about a combination of both (in previous years), but both would have to pass," Sovinski said.
Other council members agreed it may be difficult getting voters to approve increases for both property and income taxes.
Council members also discussed the possibility of adding a levy for either the fire or police department. According to Bachelor, the police department's budget accounts for 22 percent of the general fund while the fire department's budget accounts for 17 percent.
Bachelor - who explained that almost all of the income tax pays for the personnel of the fire and police departments - said the fire department's budget is set at $1 million, a "bare-bones operation."
Mercer County Board of Elections member Toni Slusser attended the meeting at the request of Mayor Sharon LaRue to answer questions about getting an issue on the ballot.
LaRue was not present at the meeting due to family obligations.
"What is the procedure, what is the paperwork?" Bachelor asked.
Slusser said a resolution, ordinance and ballot language all need approved by council members.
Slusser said there are changes to municipal income tax laws that take affect July 2, but she was not aware of all of them. She also told council members she was not there to offer legal advice, often referring their questions to the city law director, Kevin McKirnan, who was not at the meeting.
"Can the city expend money to support or oppose this? Again this would be a question for your law director," Slusser said.
However, Slusser estimated there are about 7,000 registered voters in Celina and said historically, 35 to 50 percent of those registered in Mercer County vote in a gubernational election year, such as this year.
But even if an issue passes, the city would need to make further cuts to the budget this year because additional revenue generated would not be collected until Jan. 1, 2011, Bachelor told the newspaper this morning.
The city needs to have a positive cash flow to begin the year.
"We will continue to be looking at making cuts as the year goes by. We're following our income very closely. We'll make cuts as we go forward," Bachelor said.
The general fund is projected to take in $5.42 million this year, with total expenses at $5.93 million. Last year's carryover money just barely covers the deficit, only leaving $100,000 unencumbered.
Asked the estimated state of the general fund for next year, Bachelor said he had no idea.
"It's too early in the game to have an idea on that right now," he said.
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