A vote to place a 0.75 percent income tax increase on the November ballot is expected when Wellington village council meets May 21.
Officials want to increase village income taxes to 1.75 percent and institute a tax credit of the same amount for those who live in Wellington but pay taxes to another municipality where they work.
Proponents say an increase is needed to avoid a general fund deficit in 2019 and raise money for capital improvement projects such as moving the Wellington police station to a new site.
The proposed tax plan would generate $723,000 to $773,000 per year. Annual revenue from individuals would drop $231,322 with gains coming from withholding ($828,442) and net business profit ($151,251).
Wellington voters rejected a half-percent increase by a 738-297 margin in 2004.
That measure would also have enacted a one percent credit for residents who pay city taxes elsewhere.
Village council voted to do away with a one percent tax credit in December 2002.
Current annual local income tax revenue sits at roughly $1.8 million, with $465,156 from individuals, $1.1 million in withholding, and $183,187 net business profit making up that amount.
Mayor Hans Schneider and council members feel a “strong sell” is the key to getting the tax measure passed, emphasizing the proposed tax credit and explicitly telling voters how the revenue would be used.
“I think we’re all cognizant of the impact any kind of municipal tax rate increase would make on anyone,” Schneider said. “At the end of the day we want to be up-front, honest, and open in these discussions. We’re broadcasting our committee meetings on Facebook Live and as we go through this we’re committed to doing three full readings. We’re also going to hold a public information session in addition to those three meetings as we move toward the fall.”
Council president Gene Hartman said wording in the tax plan should retain flexibility so funds aren’t completely tied to certain measures in the event the village experiences an unexpected financial hardship.
“We want the public to know what they’re voting for,” he said. “We’re committing to capital improvements within the village and relocating the police department, which we all know needs more space. The village has said we’re going to commit to this, but there should also be some discretionary spending in there, because we don’t know what’s going to break or what’s going to need fixed. We’re going to need some additional revenue for those things that could potentially come up.”
The Government Finance Officer’s Association recommends that municipalities keep at least enough unused cash in general funds to cover two months of operating expenses.
For Wellington, that’s roughly $500,000 right now but is expected to jump to $616,000 by 2023.
Council has already approved one measure that’s added roughly $320,000 to the general fund: a $100,000 cap for local tax proceeds going to the capital improvement fund.
Before the change, the capital improvement fund would receive 25 percent of those proceeds, or roughly $425,000.
The 2018 general fund budget required a 77 percent reduction in transfers to the capital improvement fund in order to avoid a $271,896 deficit.
When the general fund balance fell to $229,271 in 2013, a measure was passed the following year that sent 5.5 percent of each village utility’s annual revenue to the general fund.
As it stands, 56 percent of the general fund is made up of municipal tax proceeds — 30 percent is from utility transfers and nine percent is from property taxes.
Jonathan Delozier can be reached at 440-775-1611 or @DelozierNews on Twitter.