Northeastern considers income tax request on August ballot

Northeastern board members will consider placing a one-percent earned income tax on the August ballot at a meeting Thursday.

“We failed in November and still need additional revenue,” said Superintendent Lou Kramer. “Our financial situation hasn’t changed, except for the worst, I guess.”

Northeastern Local Schools, the county’s second largest school district, placed the same issue before voters on the ballot in November 2012. Sixty percent of voters rejected the levy.

But Kramer said the district still needs to secure additional funding.

“We get the majority of our funding locally.. and the last operating levy passed was in 2004,” he said. “Over the last four years, we’ve actually had a significant decrease in state funding.”

Northeastern’s state funding has decreased by about $1.2 million, or 9 percent, in that time, according to Ohio Department of Education records. The district also lost about $1 million in local taxes and has reduced its budget by $1.1 million, including eliminating 29 positions, said Kramer.

“It seems more fair, that way we’re not limited to just levying on property itself,” said board President Doug Murphy.

Income taxes are collected by only two Clark County districts: Southeastern and Northwestern both collect a one percent income tax, along with 182 other districts statewide, according to the Ohio Department of Taxation. That number has grown by 37 percent over the last 10 years from 134 districts in 2003.

“They’re certainly attractive if your community tends to have income that grows or you’re more rural and you know you have large property owners and they’d rather pay income taxes than property taxes,” said David Varda, executive director of the Ohio Association for School Business Officials. “There are certain people that just don’t like their income taxed… Those voters may be more willing to have a property tax than have someone tax their income.”

Northeastern covers a large area with some parts that are more residential and others areas that are more rural with a significant agricultural community.

“That’s kind of a district that the income tax is built for,” Varda said.

In the last decade, Northeastern’s median income has grown from $34,988 in 2002-03 to $35,599 in 2010-11, the most recent year available through the Ohio Department of Education. It was at its highest in 2009-10 at $36,676.

“The good and bad of income tax is that it tends to fluctuate with the economy, as you’ve seen at the state level,” said Varda.

Earned income does not include retirement income or unemployment. If the income tax goes to a vote and is approved, it would cost $400 a year for every $40,000 of income.

“I think that the income tax is probably the thing of the future really,” Murphy said. “I don’t think that we’re going to be able to just rely on the property owners to finance the school districts anymore.”

The board will consider the first resolution to place a tax issue on the Aug. 6 ballot at 6:30 p.m. Thursday at Kenton Ridge High School, 4444 Middle Urbana Road. School boards must approve two resolutions before May 8 for the August ballot.

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