Restructuring proposes 100 percent credit for majority of residents
(POWELL, Ohio) – Jan. 20, 2021 – Powell City Council unanimously approved a resolution that will place an income tax restructuring proposal before Powell voters during the Primary Election on Tuesday, May 4, 2021.
The proposal would raise the credit for taxes paid to another municipality to 100 percent. Currently, residents who pay taxes to another municipality receive a 0.25 percent credit, meaning they pay 0.5 percent to the city of Powell plus an additional tax to the city where they work. Additionally, the proposal would increase the effective income tax rate for individuals working in the city from the current rate of 0.75 percent to 2 percent. Social security and pension income are not taxed as earned income and therefore would not be impacted by the proposed change.
If approved, the proposal is estimated to generate an additional $3.4 million for public safety, economic development, operational efficiencies and capital improvements and would go into effect Jan. 1, 2022. Approximately 80 percent of the proposed additional $3.4 million received will come from corporate residents, those that work in the city but live elsewhere.
“City Council unanimously decided to bring this proposal before Powell voters this spring,” said Mayor Frank Bertone. “We have reviewed and analyzed the proposal and believe it is time to place it on the ballot to let our community decide. City Council sees this as an opportunity to restructure the current tax distribution among the residents with an increased credit of 100 percent for those that live in the city and work in a different municipality. Many residents feel the current tax burden is too high considering the taxes residents pay to other municipalities and the city of Powell.”
“The income tax has remained unchanged at 0.75 percent for three decades during a period where the city has grown rapidly,” said City Manager Andrew White. “Powell has one of the lowest effective tax rates in the state of Ohio. Out of 28 comparable central Ohio cities, Powell’s current income tax credit ranked 21st, among the least beneficial in the region.”
“A primary finding from the 2018 Citizen Financial Review Task Force Report is that the city no longer collects sufficient revenue to maintain existing capital infrastructure, such as streets and other essential services,” said White. “The city strives to deliver high-quality services, revitalize downtown, implement key initiatives outlined in the Keep Powell Moving Plan and invest in the city’s infrastructure. The current rate of 0.75 percent is not competitive in the region and causes a loss of $2.8 million in annual revenue losses.”
Powell’s most expensive infrastructure assets are its 120 lane miles of streets, 77 miles of storm sewers and 24 miles of bike paths. Developers built these improvements for the most part during the city’s most active periods of growth in the late 1980s and early 2000s. Expiring development revenue from this period exacerbates budgetary imbalance.
“Failure to address the issue will delay infrastructure investments, squeeze operational resources and eventually reduce service delivery which impacts quality of life,” said White.
Additionally, in the past, Powell’s funding for capital infrastructure and maintenance came mostly from gasoline and estate taxes and Ohio’s Local Government Fund. In recent years, the State of Ohio has dramatically cut the Local Government Fund and it eliminated the Estate Tax in 2013. Due to decreasing revenue from these funds, Powell has repeatedly deferred maintenance and operational adjustments.