Springfield leaders took the first step Tuesday toward asking voters for a higher income tax, which they said would lead to better roads and maintaining current services.
City commissioners held a first reading Tuesday night to place a 0.4-percent earned income tax increase on the ballot in November. They are expected to vote on the issue in two weeks.
A recent poll conducted for the city showed voters are split on the issue, but favor it more if it avoided cuts to services.
City leaders said the additional $6.7 million the hike would raise annually is crucial to provide the kinds of services residents and businesses are asking for, as well as to maintain current service levels.
“What we all decided was we would ask for what we needed and nothing more,” Springfield City Manager Jim Bodenmiller said.
The income tax is increasingly critical to the city’s funding, according to city officials. The income tax makes up about 78 percent of Springfield’s general fund revenue, an increase of about 13 percent over the past 10 years as the state has slashed funding for local governments.
City leaders recently estimated they will collect about $38.1 million in general fund revenue overall next year, less than the city operated with before the recession hit 10 years ago.
If the higher income tax is approved, most of the new money would replace recent cuts to state funding and allow the city to maintain current services, Bodenmiller said. An additional $2 million would go toward a street improvement fund. The rest would pay for a Safe Streets Task force, a special police unit to combat violent crime and heroin abuse.
Those services could help draw more residents and businesses to the city, Bodenmiller said.
“Being candid, with some of the crime issues we’ve had and heroin problems we’re seeing and the condition of our streets, it’s harder and harder to attract businesses and residents,” he said.
Earlier this year, a resident-led advisory group analyzed the city’s budget, which is potentially facing as much as a $930,000 shortfall this year. The panel made several recommendations last month. That included increasing the income tax rate from 2 percent to 2.4 percent for five years.
For a worker making $30,000 a year, the tax would cost an additional $9.75 per month, according to city officials.
A recent poll conducted for the city showed about 45 percent of residents would support an income tax increase, while about 42 percent said they were opposed. The remainder of the 600 residents polled said they were undecided.
City residents had mixed feelings Tuesday.
Mary Colvin, of Springfield, said many residents already have a hard time paying their own bills so any additional tax is another challenge, even if that might mean cutting city services.
“I’m against it,” Colvin said of the proposed tax increase. “Once they put that on there, they’re never going to take it off.”
Bill Ardle, of Springfield, remains undecided but said he’ s leaning toward voting for the increase. It’s a difficult decision, he said. But the city needs money to keep up with maintenance on city streets, which in many cases are already in bad shape, he said.
“There are things that need to be done in this city and they need money to do it,” Ardle said.
The vote will be important because higher taxes can also make it more challenging to attract new jobs and younger workers, said Mike McDorman, CEO of the Chamber of Greater Springfield.
“You need to be conscious of that as you’re looking at an income tax increase,” McDorman said. “It’s a value proposition. It’s what am I getting for what I’m paying?”
The city and chamber have agreed to pay $125,000 for an independent study of the city’s finances. The results are expected in September.
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