Athens city officials discuss raising the city’s income tax to make up for declining revenue

By: Jack Greene
Posted on: Wednesday, November 13, 2024

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ATHENS, Ohio (WOUB) – Athens city officials are proposing an income tax increase as revenue declines in the face of rising expenses.

The city’s administration suggested the City Council move forward with an ordinance that would put a measure to increase the city’s income tax on the ballot in May.

The administration is proposing a 0.3% increase, which would raise the tax rate from 1.95% to 2.25%.

Councilmember Jessica Thomas said the median income in Athens is $34,800, which means people at this income would see a “$2 a week or $180 a year” increase in their income taxes.

The proposal follows what has been a tough financial year for the city. Reserves in the general fund dropped to around 6.5% earlier this year because of a number of unexpected costs, including major hits to the city’s medical expenses.

Reserves now sit at 8%, but that is still below the 9% city law requires it to be.

Another reason for the proposed increase is a change in state tax laws and staffing levels at Ohio University.

Service-Safety Director Andy Stone said this move would help make up for revenue the city lost because of those changes.

“The bottom line is there is a decrease,” he said. “In 2008, Ohio University employees made up 42% of the city’s income tax withholdings paid to the city of Athens. In 2023, they are only 29%.”

The decrease reflects a decline in staff at the university and a change in state law under which remote workers pay income tax to the city in which they live, not where their employer is located.

Stone said while there is a decrease there is a silver lining.

“We are less reliant on the company in this company town,” he said. “It’s like a giant Ford factory at the end of Court Street, except it’s not a Ford factory, it’s a state university.”

Stone said if a measure went before Athens voters and failed, “you wouldn’t see anything immediately.”

“I do think over several years we would see a stagnation and possibly a reduction in specifically police and fire protection,” he said. “Once that becomes unattainable, we have to decide what other services we don’t want.”

Councilmember Alan Swank suggested instead of moving forward with an increase in income taxes, the city look at increasing property taxes.

“The income tax in Athens is an earned income tax, which basically means the only people that pay it are the ones that go to work,” he said. “Those who collect pensions, Social Security, investments and interest do not pay.”

As someone who is retired, Swank said increasing property taxes could help “spread the base around.” 

“We still drive the streets, and depend on the fire department, and depend on the police department,” he said. “We benefit from all that money you’re paying, and we appreciate that, but I’m also for paying my fair share.”

Stone said the city could increase property taxes up to a certain amount without voter approval.

Swank suggested if an increase were to come before voters, an option would be for the city to make it last for only a certain amount of years.

“In 2015 we could have never predicted what was going to happen in 2020,” he said. “And I don’t think in 2024 we can predict what’s going to happen beyond 2029.”

Stone said this levy would focus on general revenue, whereas temporary levies tend to be “tied to tangible things.” He did not rule out the possibility of making the levy temporary.

It is unclear if an ordinance will appear on the council’s agenda next week, but the city hopes to have an ordinance passed on the issue by the end of January so that a measure can be placed on the May primary ballot.