Tax increase for Pickerington?

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Tough economic times have led Pickerington city officials to consider increasing the city’s income tax rate.

Pickerington’s income tax rate has been 1 percent since 1976. Pickerington City Council’s finance committee is debating bringing forth an ordinance to full council that would place a tax issue on the the Nov. 4 ballot to raise the income tax rate to 2 percent. Council would have to decide by Aug. 21 whether or not to place the issue on the ballot.

Council is also considering three credit options, one of which will be chosen to be acted upon as legislation:

•an ordinance to provide up to 1.5 percent credit on income taxes paid to other municipalities, from 50 percent of the taxes paid to other such municipalities per year;

•an ordinance to provide a 100 percent credit for income taxes paid to other municipalities above .5 percent, from 50 percent of the taxes paid to other municipalities per year; and

•an ordinance to increase the credit for income taxes paid to other municipalities from 50 percent of the taxes paid to other such municipalities to 75 percent per year.

Pickerington’s existing 1 percent income tax brings in about $4.1 million annually.  A two percent income tax in Pickerington, with credits for income taxes paid in other places figured in, could generate about $5.8 million a year.

In comparison, the neighboring village of Groveport, with about half the population of Pickerington but with a much larger commercial tax base, brought in $9 million in income tax revenue in 2007 with its 2 percent income tax.

Budget strains

Pickerington’s city budget has been burdened by several factors.

Proposed road improvements, such as widening State Route 256 to four lanes south of Diley Road, and the cost of maintaining a high level of police protection in a growing city could stretch the city’s finances in the coming years. Extra fuel charges, personnel costs (the city has instituted a hiring freeze for the past six months, according to City Manager Tim Hansley), the high cost of petroleum based road pavement, and expenses incurred during heavy winter snows added to the financial stress. Street repaving is on hold and Pickerington Service Director Ed Drobina told council at its May 20 meeting that potholes in the roadways are just being cold patched for now.

Debt

Long term debts also play a role as, to fund the Diley Road widening project, the city received a loan from the state that was interest free for the first year then charged at a rate of 3 percent every year after that. Because most loans have an interest rate closer to 6 percent, the city accepted the offer, Pickerington Finance Director Linda Fersch said in April.

However, instead of a 25 year term like most of Pickerington’s other debts, the new loan has a 10 year term. The shorter term equates to higher payments. The city secured the loan by promising that if the general fund could no longer afford to make payments, other revenue sources would be tapped. This year, the city began relying on impact fees to cover the loan. Impact fees are collected from new businesses and residential developments for buildings and construction projects.

The impact fees that Pickerington uses to cover the Diley Road loan were earmarked for road improvements. By the end of 2008, the city will drain the road impact fees yet will still need to make loan payments.


Messenger Staff Writer Rachel Scofield contributed to this story.

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