Urbana to make second attempt to pass income tax increase

Voters in Urbana rejected a proposal to raise the city’s income tax last year, but city officials will again try to convince voters that the additional revenue is needed to provide stability for police and firefighters.

The city’s income tax is 1.4 percent, but if approved the proposal would add an additional 0.6-percent, said Bill Bean, Urbana’s mayor. That would mean the city’s total income tax would become 2 percent.

“The city has been on an antiquated budget for quite some time,” said Doug Hoffman, a city council member.

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Urbana’s tax rate was a flat 1 percent until 1991 when voters passed an an additional four-tenths of a percent. The current rate on earned income includes wages, salaries or commissions earned in the city of Urbana.

Although voters shot down the proposed increase last fall, Bean said the city is more organized and has worked to get the city's police and fire unions to back the latest attempt.

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“The only way we really generate money is the income tax,” Bean said, estimating the city has lost about $3 million in revenue since the state slashed the amount of Local Government Fund Revenue provided to municipalities around 2010. He said about 53 percent of the city’s general fund budget is used to cover the cost of police and fire services.

The state also eliminated the estate tax for local municipalities, which Bean said brought an additional $250,000 in revenue to the city the last year it was in place.

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The additional revenue raised by the income tax increase would free up more revenue in the general fund, most of which would be used for projects like paving more streets.

“We only pave about half the streets we should,” Bean said. “We spend about $200,000 to $250,000 and we should be spending about half a million a year with paving.”

The additional revenue would also provide more stable revenue for the city’s fire and police department, Bean said. He said both those agencies have had stable staffing over the past several years. But in the meantime, both departments have seen a spike in calls for service.

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Since 2010, Bean said calls for service to the Urbana Police Division have risen 10 percent, while fire and emergency medical service calls have climbed 17 percent. Both departments have done well handling the additional workload, Bean said, but the additional revenue would provide a cushion if the city’s finances take any more hits over the next several years.

“If we hit a downturn it’s really going to hurt us,” Bean said.

He noted the fire division in particular has some expensive equipment that will be needed in the next few years, including replacing a chassis for a medic unit that could cost between $250,000 to $300,000 and a fire engine that needs to be replaced at an estimated cost of about $625,000.

“There are some big ticket items out there we’ll be looking at,” Bean said.


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