Monday, October 10th, 2011
Celina residents call double tax unjust
By William Kincaid
CELINA - Is it fair that some Celina residents who work outside of the corporation limits pay income taxes to two municipalities?
That's the case for some after the city income tax jumped from 1 to 1.5 percent, while the tax credit extended to people who live in Celina but work elsewhere stayed at 1 percent.
Arguments can be made for both sides. Shouldn't everyone who lives in the city contribute for the police and fire departments that keep them safe? On the other hand, should people really be expected to pay income taxes in two cities just because of where they work?
An estimated 28 to 30 percent of the city's income tax accounts represent Celina people who work outside of the city, according to city records.
In January the city's income tax rate jumped to 1.5 percent after voters approved an additional 0.5 percent tax to support the fire and police departments. However, the city tax credit remains at 1 percent.
If a person lives in Celina but works in New Bremen (where the income tax rate is 1.5 percent), he or she would pay 2 percent in income taxes. The taxes would be 1.5 percent to New Bremen and 0.5 percent to Celina after being credited 1 percent.
Unlike Celina, many other nearby communities - Coldwater, St. Henry, Fort Recovery, Minster, New Bremen, Greenville, Lima, New Knoxville and Wapakoneta - offer a 100 percent tax credit. If a person lives in New Bremen but works in Dayton (where the income tax rate is 2.25), he or she would pay 2.25 percent to Dayton only. They would not pay a tax to New Bremen because of the 100 percent tax credit.
However, if a person lives in New Bremen, but works in a community with a lower tax rate (such as Coldwater, where the rate is 1 percent), he or she would still owe New Bremen 0.5 percent in income taxes to meet the 1.5 percent tax requirement there.
Celina men Rob Luebke and Ron Luebke - who are not related - think double taxing residents is unfair.
"It's more about fair taxation than anything," Rob Luebke, who works at Setex in St. Marys, said about his concerns. He pays Celina 0.5 percent and St. Marys 1.5 percent in taxes.
He said he has lived in Celina since 1988 and moving away because the double tax isn't a viable option.
"I like where I live," he said. "I live very close to downtown."
Ron Luebke, who works at Crown Equipment in New Bremen, was vocal in the past when city council members considered rescinding the 1 percent tax credit. He pays 1.5 percent to New Bremen and 0.5 percent to Celina.
He believes double taxes could potentially discourage businesses and people from moving to Celina. Some people have to drive out of town for work, he said, adding double-taxing is a slap in their faces.
Some council members have said they would consider rescinding the entire 1 percent income tax credit as a means to generate extra money, roughly $573,000 annually.
The discussion was brought up in recent months as a group of residents got an initiative on the November ballot to set the income tax rate back to 1 percent. The initiative came about after residents were upset to learn the city had a million dollar carryover into 2011, just months after residents approved increasing the rate to 1.5 percent. Council has said the extra 0.5 percent funds the police and fire departments; without that money, the general fund and any carryover will be depleted.
Councilman Ed Jeffries said council definitely will have to consider rescinding the credit if the half percent income tax is taken away.
"That's going to have to be on the table to rescind that because I think we're going to need that money to keep firefighters and police officers going," councilman Jeff Larmore said.
When push comes to shove, Larmore said his goal is to protect the citizens by funding ample emergency services.
"That's how I'm going to weigh that decision," he said. "To me, in my opinion, it's about protecting everybody for now."
Ultimately, the double-tax possibility is a state issue, as it's permitted by law, Larmore said.
"Because this is all over the state of Ohio," he said.
Councilwoman Angie King said the idea of rescinding the 1 percent tax credit if the half-percent income tax is rescinded is possible but she is against it.
"I don't like the idea of taking way the tax credit, but I know other members of council may feel different," she said.
As of Aug. 31, $664,189 or 66.4 percent of the city's projection was collected from the half-percent tax this year.
Stewart said the city could have a general fund carryover between $612,576 to $1.22 million at the end of this year. The city anticipated $7.39 million in total general fund expenses this year and so far has spent $4.95 million.
If the extra half-percent tax stays, the city's total revenue in 2012 - based on preliminary estimates - could be $6.614 million, not including the carryover from 2011. If the tax is taken away, the total revenue for 2012 could be $5.614 million plus the carryover from this year.
| ||Income tax percentage ||Tax credit|
|Coldwater ||1 ||1|
|St. Henry ||1 ||1|
|Fort Recovery ||1 ||1|
|Celina ||1.5 ||1|
|Rockford ||1 ||0.5|
|Minster ||1.5 ||1.5|
|New Bremen ||1.5 ||1.5|
|Greenville ||1.5 ||1.5|
|Lima ||1.5 ||1.5|
|St. Marys ||1.5 ||1.5|
|Columbus ||2.5 ||2.5|
|Dayton ||2.25 ||2.25|
|New Knoxville ||1.5 ||1.5|
|Wapakoneta ||1 ||1|