By the Numbers
$7.5 million: Estimated loss of revenue for the city if the half-percent income tax is renewed.
2 percent: The city's currently income tax rate, including a permanent 1½ percent.
$600: Estimated cost of the city's 2-percent income tax rate for a person making $30,000 per year.
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The city will likely ask taxpayers to renew a half-percent income tax in May, but commissioners are divided on how long the issue should last.
If voters were to reject the half-percent renewal, the city would lose approximately $7.5 million in annual revenue, meaning some services could be reduced or eliminated.
“There are no new taxes requested here,” City Manager Jim Bodenmiller said. “We’re simply seeking to continue what we have in place today. We can’t stress that enough.”
The city commission discussed the renewal at Tuesday’s meeting. Members are expected to vote on putting the issue on the May 6 primary election ballot when they meet Feb. 4.
Springfield has a 2 percent total income tax rate, including a permanent 1½ percent tax. The city is not seeking new tax dollars, rather a continuation of the current half-percent tax, which was passed last by voters in 1999.
The current half-percent income tax is set to expire on June 30, 2o15.
For a resident making $30,000 per year in gross wages, the half-percent tax is approximately $150 a year.
Bodenmiller recommended the city ask voters to make the half-percent income tax permanent. Commissioner Dan Martin believes the tax should last 15 years, similar to the last time it was on the ballot in 1999.
“I want to keep it identical to the last issue we had,” Martin said.
Bodenmiller said the city should ask voters to make the tax permanent, or “we’ll be in the same boat 15 years from now.” Bodenmiller said the city faced a similar issue with the police levy fund, which voters already made permanent.
“It’s just so difficult for us to plan our operations one or two years down the road without the knowledge of that being in place,” Bodenmiller said.
Commissioner Karen Duncan said she supports the city manager’s recommendation, especially in light of recent cuts from the state government.
“I can’t imagine there’s going to come a time that we’d be able to operate the city on the type of funds that less than 2-percent would provide for us,” Duncan said. “It gives stability to the city.”
The income tax was originally approved by voters in 1975, increasing the tax from 1½ to 2 percent. After the first 25-year term, the tax was renewed in 1999 for another 15 years.
The 2 percent income tax generates approximately $30 million annually for the city. If the half-percent tax were to expire, the city would lose approximately $7.5 million in annual revenue.
The city also splits its income tax revenue, sending 90 percent to the general fund and the remainder to the permanent improvement fund.
If the tax were to expire, the city would likely have approximately $20.25 million remaining for the general fund. If combined with other general fund revenues, such as fines and forfeitures and hotel/motel taxes among others, the city would have approximately $29.75 million in its general fund.
The city’s general fund is typically around $37 million per year, Bodenmiller said.
The cost of safety services, such as police, fire, dispatch and courts, is currently $26.2 million.
If the tax were to expire, the rest of the city’s government would have to run on approximately $3.5 million. The remaining money would have to fund a wide range of city services such as economic development, engineering, street lighting, code enforcement, planning and zoning and building regulations among others.
“It’s a pretty sobering number,” Bodenmiller said.
Bodenmiller would not comment on which services could be cut, but he said one example is eliminating the mowing of boulevards throughout the city.
Income tax makes up approximately 74 percent of the city’s general fund. The city spends approximately 71 percent of its general fund on public safety and criminal justice services.
Last year, the city ran a deficit of $140,000. The city plans to dip into its reserve funds to cover a $1.3 million shortfall this year.
State reductions to local government funds and the elimination of the estate tax and others have meant approximately $3 to $3.5 million in lost revenue annually for the city, according to Bodenmiller.
The city has eliminated approximately 135 jobs over the last seven years, as well cut back on certain services, such as paving neighborhood streets.
“We’ve done all this to make ends meet with a struggling and sluggish economy,” Bodenmiller said.
Mayor Warren Copeland noted several advantages to the income tax, including the tax rate being applied to people who work in the city but do not live there.
“We collect a significant amount of tax from people who have the opportunity to work in the city,” Copeland said. “If it were a property tax, only the people living in the city would pay that tax.”
He also said the tax is only paid on wages, meaning retirees collecting Social Security do not have to pay income taxes.
The deadline to file the issue with the Clark County Board of Elections is 4 p.m. on Feb. 5. The ballot language won’t be determined until the issue is filed, according to Law Director Jerry Strozdas.
Commissioner Kevin O’Neill asked to see the previous ballot language from both 1975 and 1999.
“I don’t think there’s anybody sitting here that questions the fact that we have to have this,” O’Neill said. “It’s just a matter of how we sell it to the public.”
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