VW officials explain need for tax increase

DAVE MOSIER/independent editor

Van Wert city officials appeared at a town hall-type meeting on Tuesday evening to discuss the need for a 0.28-percent city income tax increase placed on the ballot in May. The meeting was hosted by the Heart Land Patriots conservative political group.

City officials attending included Mayor Jerry Mazur, Safety-Service Director Jay Fleming, City Auditor Martha Balyeat, City Law Director John Hatcher, Council President Pete Weir, and Council members Joi Mergy, Ken Markward, Warren Straley, Steve Trittschuh, Jon Tomlinson, and Bill Marshall.

Following an introduction by the Rev. Keith Stoller of the Patriots group, Mayor Mazur talked about the primary reasons for placing the income tax levy on the ballot.

Those reasons include a loss of state revenues over the past several years due to the elimination of the estate tax and tangible personal property tax, as well as cuts to local government funds; higher costs due to inflation, especially in the health care area; and the continuing loss of interest revenue related to the recession that began in 2008,

Other related factors include the relatively low average income of Van Wert residents and the city’s aging population. The average income in Van Wert is approximately $38,000, the mayor said, versus an average of $55,000 statewide, while Van Wert County residents have the oldest average age among Ohio’s 88 counties.

Mayor Mazur stressed that the levy is only for the city’s General Fund, since the city’s other funds are mostly “enterprise” funds, such as water and sewer, which generate additional revenues by raising utility rates.

The mayor noted the General Fund faces some extremely difficult financial challenges in the future.

“If we continue to lose revenue from the state, and also our tax base remains what it is, and we continue to spend what we’re spending, somewhere down the road we’re going to have to whack something really hard,” Mayor Mazur said, noting that the “whacking” would likely come in the loss of city services due to the forced layoff of employees paid through the General Fund.

Since approximately 75 percent of General Fund revenues go to the police and fire departments, layoffs would likely affect police and fire coverage, several city officials noted.

The mayor and Balyeat both said the city has taken a number of steps to either cut costs or generate additional revenues over the past few years.

“We’ve looked under all the ‘couch cushions’ for money and taken many steps, and had many long meetings, and, at times, contentious conversations with each other to keep us from this moment, Hatcher said. “This is something we haven’t gone into lightly. We’ve taken several steps to keep us from this point, and all it has done is put it off for several years.”

Steps the city has taken includes 1-2 percent raises for most city employees over the past several years, attempts to collect delinquent income taxes, which Hatcher said has brought in approximately $75,000 in uncollected revenues, forcing city employees to pay for more of their health insurance costs, and “soft billing” to recoup some of the cost of EMS runs.

For five of the past seven years, the city has also used three-quarters of the .22-percent Safety Capital Income Tax — between $500,000 and $600,000 — to fund police and fire salaries and benefits. City officials said that scenario will begin to hurt the city’s ability to provide police and fire services as equipment ages and there is not enough money left in the fund to replace it.

The language of the ballot issue approving use of safety capital tax revenues also mandates that the city maintain 21 police officers and 19 firefighters. Having to cut police or fire personnel, which are currently at those levels, would prevent the city from using safety capital tax revenues to balance its General Fund budget.

When someone questioned pay increases for city employees, Tomlinson explained that the 1-2 percent pay increases haven’t even kept up with inflation, which has averaged 3 percent annually, as well as the fact that city employees now pay an additional 7 percent of their health insurance costs.

“So, in real dollars, each of the employees has taken a 10-percent pay cut to try … to keep us in the black, and not in the red,” Tomlinson explained.

The mayor said the 0.28-percent income tax increase would raise approximately $1 million dollars, which would maintain current city services in the near future. He also said he feels efforts of the new city-county economic development agency, the Van Wert Area Economic Development Corporation, and its executive director, Stacy Adam, will bring new jobs — and increased tax revenues — to the city.

“I think we have to maintain the quality of life in this city so that we can encourage economic development,” Mazur said. “When people come through here they don’t want to see the parks in disarray, they want to see the parks looking like they should. If we, Van Wert residents, don’t care about the appearance of our city, nobody is going to come and set up shop (here).”

The cost to a city resident making $50,000 a year would be an additional $2.69 a week, or approximately $140 more annually.

Several city officials noted that Van Wert is not unique is having to seek an income tax increase, with Tomlinson adding that 387 Ohio municipalities were on the ballot in 2016 seeking new or replacement tax levies.

It was also noted that the city’s retired senior citizens, the largest age group using EMS services, essentially pay little or no income taxes.

“I hope that we get the message out loud and clear, especially to the seniors who receive 30 percent of the benefits of EMS, that they realize that they’re not going to be affected by this tax increase,” he said.

Marshall said pensions, investment income, social security payments, welfare payments, alimony, liability judgments, worker’s compensation payments, military disability and pension payments, unemployment payments, and lottery winnings under $10,000 are not taxed by the city.

“We have to look at our population, who’s paying taxes, because we’re only taxing earned income and net profits,” Marshall added.

The mayor said that, if the levy fails this year, because of the city’ financial problems, he will likely place it back on the ballot until it does pass.

More town hall meetings are being scheduled to explain the city’s financial situation to its residents.