City of Lyndhurst, Ohio Finance Committee
Agendas & Minutes
November 5, 2012: Finance Committee
The Finance Committee will meet on Monday, November 5, 2012 at 6:30 p.m. to further discuss the Tax Credit/Tax Rate issue.
Patrick A. Ward, Chairman
November 5, 2012: Finance Committee
The Finance Committee met Monday, November 5, 2012 at 6:30 p.m. Present were Council members Frey, Gambatese, LoPresti, Marko, Packard, Schlessel and Ward. Also present were, Mayor Cicero, Finance Director Kovalchik, Law Director Murphy, Chief Carroll and Chief Porrello. The purpose of the meeting was to continue discussion on the topic of the Income Tax Credit/Income Tax Rate Issue.
Mr. Ward opened the meeting with an outline of the process that brought the Committee to this point in the discussion. The Mayor/Administration brought the issue of the impact State actions will have on the City's financial resources and suggested to Council a course of action - that is the Mayor/Administration's job. Council has taken the discussion of the problem and, over the course of several meetings has settled upon a number of options to address it - that is Council's job. Mr. Ward further clarified the "taxpayer" numbers provided by RITA for the last meeting indicating it was later learned those numbers represented individual W-2's filed not individual persons as some file multiple W-2's.
The Committee has reviewed the number of initiatives that have been undertaken over the past 7 years to change operations and cut costs, the contribution and participation of the employees in the process and the cooperation that has dictated this success. Were it not for these changes the City's finances, tax rate and tax credit would have been a needed conversation many years ago.
The City's Income Tax Rate and Tax Credit have a well-documented history. Councils past have cut back the credit, when necessary and restored it when they were able. The voters have responded to the need to fund the essential services provided by raising the Income Tax Rate. Prudent management and careful planning have stretched the City Taxpayers' dollars.
Mr. Ward complimented those residents who have attended the meetings pointing out that Mr. Bill Ritz was quoted in the minutes of meetings held in the mid-1980's and applauded his commitment to being well informed. Mr. Ward indicated the Committee had progressed a long way from its first discussions on this subject. What the Committee has learned is that there is total agreement on the fact the City will need additional revenue to fill the hole created by state actions; the Committee would like a balanced approach that spreads the burden between residents and non-residents alike and that the Community wants Council to be transparent in everything it does relative to this issue.
Mrs. Kovalchik distributed a copy of the Tax Rate Scenario sheet requested. At the last meeting Committee members had narrowed the list of options to be considered to five (A,B,C,D,E) and one for reference (F). Mr. Ward asked which, if any, Committee members would suggest be eliminated from consideration and suggested option "A" (1.5% with a 0% credit) be eliminated. All were in agreement. It was suggested by Mr. Frey that option "C" (1.75% with a .25% credit) be eliminated and by Mr. Marko that option "E" (2% with a .75% credit) be eliminated - all agreed.
Mr. Frey suggested the Committee recommend option "B" (1.75% tax rate with a .50% credit) be recommended to Council. Mr. Ward suggested that option "D" (2% tax rate with a .50% credit) be recommended. Option "B" would provide the City and estimated $1,130,000 in revenue and Option "D" would provide an estimated $2,000,000. Option "B" would place an added burden of $668,960 on residents and $380,765 on non-residents while Option "D" would place an added burden of $900,847 on residents with non-residents carrying an added $981,025. Mr. Marko was concerned that whichever option moves forward be sufficient to serve the needs of the residents.
Committee members weighed in on the discussion with Mr. Frey and Mr. Gambatese favoring Option "B" and Mr. LoPresti, Mr. Marko, Mr. Packard, Mr. Schlessel and Mr. Ward favoring Option "D". As Option "D" was selected by the majority of the Committee's members, Mr. Ward distributed a revised Ordinance 2012-79 that had been prepared by the Law Director for the last meeting and updated earlier this evening. The Legislation would provide for an elimination of the .50% Tax Credit EFFECTIVE July 1, 2013 but would NOT take effect if the voters support an increase in the Income Tax Rate prior to that July 1st date. Mr. Ward indicated the Ordinance addressed the concerns brought forward by the Committee members and the public - it provides the needed funds, it provides the transparency requested by the public and it spreads the burden fairly between residents and non-residents.
Mr. Gambatese indicated "we have not publicized the discussions enough to where people know what is going on". Mr. Schlessel stated these meetings have been well documented and announced as all meetings are and that the Brainard Pool discussions, that were publicized the same way, "packed the room for multiple meetings". Mr. Ward indicated the proposed legislation, if recommended, would be on Council's Agenda for 3 readings and had already been the subject of 5 Committee meetings so there was past opportunity and ample future opportunity for the public to become informed and involved as well. He further indicated Council would have to undertake the task of communicating with the public if there was any hope of gaining support for any issue put on a ballot.
Mr. Gambatese indicated he did not like the language in Section 2 which would eliminate the Credit if there is no tax increase. Mr. Ward stated that the Ordinance, and that section specifically, was crafted to assure Council was extremely transparent about what the need was, what the public would be asked to support and what would happen as transparency was one of the key things the Committee had been asked to address. Mr. Ward further stated that every member had agreed there was a need for the additional funds and that a plan would need to be adopted to address it. He asked Mr. Gambatese to explain what the Committee was trying to address to which Mr. Gambatese replied, "a problem not of our making". Mr. Ward further indicated the proposed Ordinance and outlined steps were decided specifically to address what had been requested as a result of the previous four meetings' discussions.
Mr. Murphy explained the steps that would follow should Council determine it necessary to place the question of an Income Tax Increase on the Ballot. Mr. Ward stated it would be likely that the next opportunity to have that question before the voters would be May. Mr. Murphy further stated, should the Committee move to place the Ordinance on Council's Agenda, it would be subject to three readings and could be amended should Council determine the suggested rate or credit need to be modified or if any other language would need to be changed.
A motion was made by Mr. Marko, seconded by Mr. LoPresti to recommend that Ordinance 2012-79 as prepared by the Law Director be forwarded to Council for consideration. All voted AYE with the exception of Mr. Gambatese who voted NAY.
With no further business to discuss the meeting adjourned at 7:58 pm.
Patrick A. Ward