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Athens voters will soon decide whether to raise taxes as the city’s revenue lags behind expenses
By: David Forster
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ATHENS, Ohio (WOUB) — Athens officials say an increase in the city’s income tax is needed to cover rising expenses.
An analysis of Athens data shows that over the past 10 years, expenses and tax revenue have for the most part risen at much the same rate. But over the past two years, expenses have been growing faster.
Much of this growth is in salaries and benefits, which comprise about 75 percent of the city’s operating budget. The cost for medical insurance alone shot up nearly 30 percent over the past two years, a trend plaguing employers nationwide.
In an effort to keep revenue on pace with expenses, city leaders decided to place an income tax increase before voters on the May 6 ballot. It would raise the tax from 1.95 percent to 2.25 percent.
Raising taxes is often an unpopular move, and the city’s proposal has raised concerns about the impact it would have on lower-income residents in particular.
Residents who earn $30,000 a year now pay $585 a year in city income taxes. Under the proposed increase they would pay $675. For those earning $50,000, the tax would rise from $975 to $1,125.
“We understand that could be a big amount for some people,” Josh Thomas, the city’s treasurer, said at a recent town hall meeting. “That could be an amount that makes them say, ‘I don’t want to do this.’ … We’re asking you to take a look at your budget. We will continue to take a look at our budget.”
Most of the tax collected goes into the general fund, which is used to fund the city’s various departments, including the municipal court, code enforcement and the police and fire departments.
The income tax alone is not enough to keep these departments running. It covers about 60 percent of the cost. The rest comes from a variety of sources, including fines, fees, grants and other tax revenue.
The last time the city raised the portion of the income tax that feeds the general fund was in 2016, increasing the total tax from 1.75 percent to the current 1.95 percent.
Mayor Steve Patterson said at the town hall that one reason income tax revenue is lagging behind expenses is because the city is receiving significantly less from Ohio University employees.
The university is the city’s largest employer by far, and the taxes paid by its employees used to account for about 40 percent of the city’s income tax revenue, Patterson said. That number is now around 28 to 29 percent, he said.
Part of this has to do with layoffs at the university during the pandemic. But it’s also a result of more university employees continuing to work remotely post-pandemic.
Employees who work from home used to pay income taxes to the city in which their employer is located. State lawmakers changed this during the pandemic, and now remote employees pay taxes to the city in which they live.
This was a significant hit to the city’s revenue.
Meanwhile, the city is paying more for its own employees, not just in wages but also retirement benefits and health insurance. The city has some control over these expenses but must bargain with four unions that represent police, firefighters and other city employees.
Thomas said the city is committed to paying good wages to both its union and nonunion employees.
“We care about a lot of things in Athens,” Thomas said. “I think most of the residents here do care about a good wage and good benefits for jobs in Athens. … I think we have always tried to take that into consideration when we do make decisions for the city. … So we want to try and continue to keep that trend going. So in terms of, to do that, it does take a little bit more money.”
But with salaries and benefits consuming about three-quarters of the city’s budget, it doesn’t leave much room to trim expenses without cutting into personnel.
Patterson said if voters reject the tax increase, the city will have to look at staffing. He said the city will try to avoid layoffs and instead cut personnel expenses by not filling positions as employees leave the city or retire. He said retirements in the police, fire and street departments are expected in the next year or two.
The mayor said his department heads also will be looking for other ways to trim expenses with the least impact on services.
Besides just nibbling at the edges of the budget, the city is also looking for more substantial and permanent savings, Patterson said. He mentioned a partnership that allows employees to gas up city vehicles at the university’s motor pool, saving on fuel costs. Solar panels installed at the city’s water treatment plant have reduced its electric bills.
“So we’re always looking at other ways in which we can trim costs — not just so much saying, ‘OK, we’re not going to have Swingline staplers anymore, get rid of them. We’re not buying paper clips or whatever.’ We’re able to look at real meaningful things that have a long lasting impact within our community.”
Some residents have raised concern the tax increase was proposed as a way for the city to recover the more than $700,000 it lost in a cyber scam late last year.
Thomas said this is not the case. He said city leaders began discussing the idea of a tax increase early last year after a state audit raised concerns that the city’s expenses were outpacing revenue and projections showed this trend was likely to continue.