Committee: Springfield must study finances before seeking tax hike

Updated May 25, 2016

The city of Springfield should complete an in-depth study of its expenses and possible cuts if it hopes to pass a tax increase in November, members of an advisory panel said.

Andy Bell and Mark Robertson presented the Community Financial Advisory Committee’s findings to the Springfield City Commission at a work session on Tuesday night.

“I know timing is an issue here, you’d like to get this on the ballot, but I think it will be awful tough to get this passed without some good solid information and some good plans on what we’re going to do to decrease expenses,” Bell said.

The advisory group was chosen earlier this year to analyze the city’s budget, which has a projected $930,000 deficit.

The committee — a panel of business leaders and residents — made several recommendations to commissioners in a eight-page report released this month, including increasing the income tax rate from 2 percent to 2.4 percent for five years.

The committee also wants a bench-marking and performance study completed by an outside firm to help justify the decision to raise taxes before commissioners vote to go on the ballot, Bell said.

The city has begun discussions with firms to complete the study, Springfield City Manager Jim Bodenmiller said.

The Chamber of Greater Springfield has been advocating for a study to see what efficiencies and improvements can be made, Board Chairman Jim Lagos said. The chamber met with the city last week to discuss it.

“We think the main thing to do is to complete a performance audit from a totally neutral, experienced group of experts to see where we are financially,” Lagos said. “I’m optimistic something very good is going to come out of this.”

The proposed tax increase would generate an additional $6.6 million per year.

“It will get us over the short-term hurdle,” Bell said.

The city projects it will collect about $37.9 million in general fund revenues this year, including about $28.9 million in income taxes.

But it also estimates it will spend about $38.9 million in 2016, most of it on personnel costs. About $4.8 million will be on health insurance.

Springfield recently received about $5 million in cuts from the state, Bodenmiller said, including to estate taxes and local government funds.

The panel met seven times over the past five months, including two recent meetings with no city staff present. Each member voted on each recommendation and had several chances to comment, Bell said. There were two dissenting votes on the tax increase recommendation.

The process was eye-opening, Bell said, especially considering the limited amount of ways the city can ask residents to increase revenue.

“I didn’t realize how complicated city government could be based on the revenues and the expenditures,” Bell said.

Only states and counties can collect sales taxes and the city can’t pull money from restricted funds, such as the water or sewer funds.

“We’re limited on what we can do,” Bodenmiller said.

About 30 percent of income taxes collected come from people who work in the city, Copeland said, but don’t live here.

“That’s another argument why the wage tax makes sense,” Copeland said.

After the committee’s report was released, Robertson saw several people who didn’t understand how they were taxed, especially seniors. The income tax is collected on earned wages, not social security or other fixed incomes.

“You have a huge job ahead of you educating the public,” Robertson said.

The report also recommends more marketing of city services.

“If we’re going to ask citizens to vote on a tax increase, we need to have our ducks in order and have some good materials on why that’s needed and show them what we’re doing to control expenses,” Bell said.

Laura Jarzab and Whitney Neal co-own of Revival yoga studio and tea salon in downtown Springfield. They said they’re on the fence about raising income taxes.

“If people have to pay a lot in taxes it’s probably a little bit harder to justify spending on something extra like yoga or clothing,” Jarzab said.

But they also see the need to maintain city services.

“We both live in Springfield so we definitely, in starting this business, wanted to help revitalize downtown … I don’t know which way I would truly vote but I do see the positive, the benefit in both sides.”

Funding for the Reid Park Golf Course should also be eliminated after the 2017 season, the report says.

“We hate to do that because it’s a tremendous asset but the public votes on that by their usage,” Bell said.

The commissioners have discussed ending the golf funding or finding a management company after this season, depending on course usage, Springfield City Commissioner Kevin O’Neill said.

“It’s an amenity to have your own municipal golf course, even if it’s a private entity running it,” O’Neill said. “It secures golf will always be in the community and not in private hands. It’s just an amenity we need to keep if we can, but we agree it should not be a losing proposition.”

Staff Writer Katherine Collins contributed to this report.