Report: Springfield should increase income tax rate, look at cuts

The city’s current income tax rate is 2 percent. The report recommends increasing that to a maximum of 2.4 percent for five years. If approved by voters, that would generate about $6.6 million annually, including $5.1 million for operations and $1.5 million for capital projects.

The Community Financial Advisory Committee was chosen earlier this year to analyze the city’s budget, which has a projected $930,000 deficit this year. The group’s eight-page report was completed this week and released today. They met seven times over the past five months.

The report acknowledges that the tax hike will face opposition but says there are “no other choices in the short run” but to increase the local tax rate in Springfield.

The city is currently seeking input from residents about its services through surveys and focus groups, Springfield City Manager Jim Bodenmiller said. That information will be compiled and a final recommendation on whether or not to seek a tax increase will be made to city commissioners in late June or early July, he said.

The deadline to file local issues with the Clark County Board of Elections for the general election is Aug. 10.

The city faces an ugly choice, Mayor Warren Copeland said — ask residents for more revenue or make cuts to safety forces. Those services include police, fire/EMS, 9-1-1 dispatching and the municipal court, which makes up about 76 percent of the general fund budget.

“My own personal preference would be to pay a little bit more in taxes and keep the safety forces functioning, but the people are going to have to decide,” he said. “We’re likely to give them that choice and we’ll live by whatever they decide.”

The city likely needs a combination of more revenue and cuts to get where it needs to be, Springfield City Commissioner Kevin O’Neill said.

“We can only afford as much government as we can pay for,” O’Neill said. “We have to live within our budget. If the people don’t want to pay for it, just say no.”

The advisory committee also asked the city to do a bench-marking and performance study before placing an income tax increase on the ballot.

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 — $26.4 million — 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.

That leaves cities to fend for themselves, said local businessman Andy Bell, who wrote the report as part of the 21-person advisory committee. It was written without participation from city staff members, he said.

“They’re going to have to ask the public to invest in the community,” Bell said. “Our infrastructure is just going downhill. The streets are in bad shape and it doesn’t give a very good impression for the people who want to locate here.”

The report also recommended the city increase communication with residents and employees. The city recently launched a Facebook page to do so.

“We have a lot of amazing employees who do amazing things every day and no one really hears about it,” he said.

The committee also recommended improving cooperation between the city, Clark County and the Chamber of Greater Springfield. They need to “iron out differences and get on the same page,” the report says.

“We all actually work pretty well together but there is room for improvement,” Bodenmiller said.

Other recommendations include ending the National Trail Parks and Recreation District funding for Reid Park Golf Course and eliminating health insurance for some employee spouses who have access to other health care. It also calls for looking to share more services with other governments, citing the Clark County Combined Health District as an example.

It’s unclear how much money could be saved with the recommendations, Bodenmiller said, including some that must be negotiated with unions.

The city’s budget this year calls for 568 full-time employees, down from 700 about 10 years ago.

Job cuts are “always on the table” and will be examined this year and next year, Bodenmiller said, but that must be balanced with how it affects services.

In 2014, city voters rejected a quarter-percent income tax increase that would have generated about $3.75 million per year to pay for road repairs. The tax wasn’t supported by the business community, including the chamber, which couldn’t be reached for comment on Friday.

If city leaders ask voters again for a tax increase, Bodenmiller said they must create a plan residents can support.

“They need to know what our needs are and how the money is going to be spent,” he said.

The report wasn’t surprising, IAFF Local 333 President Andy Rigsbee said, but the firefighters union is concerned about the city’s financial situation.

“We’re hopeful city leaders will be able to reach some kind of a resolution,” he said. “We realize the importance of the services provided both by the rest of the city and the fire department and police division. We feel we’ve been providing good value for the money.”

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