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Answers to city tax increase questions


ELYRIA - On Nov. 3, Elyria voters will head to the polls to vote on Issue 10, a 0.5 percentage point permanent income tax increase - one that city officials say is imperative to keeping existing city services and restoring some of what has been cut.

Passage would mean the reinstatement of 10 laid-off firefighters would be reinstated, that no police officer positions will be cut, that a portion of the city's parks and recreation programs will be restored and that the Police Department would see a portion of its civilian support staff brought back to work.

However, if the tax fails, Mayor Bill Grace said additional firefighter positions - on top of the 16 that were already lost this year - will be cut, only those parks and recreation programs that can fund themselves will be offered and the Street Department will have less money to maintain roads.

But the most dramatic consequence would come in the Police Department. While the department has seen its jail staff and civilian force eliminated due to budget shortfalls, it has escaped cuts to the patrol force this year. However, if the tax fails, 10 to 15 police officers will be laid off next year.

We asked you, the readers, to send us the questions you had about the tax issue, and The Chronicle-Telegram asked Grace and City Auditor Ted Pileski to answer them.

Q: I've read that the mayor says that if the tax increase passes, there still might be layoffs. So, my question is, if this passes, what guarantee do we have that he's not going to lay off people like he did last time this issue came up?

Grace: The city's employment expectations, should Issue 10 pass, are based on revenue projections. During the course of this year, revenue has declined at varying rates from one month to the next. September's tax collections were 19 percent below September of last year. This was the single largest monthly decline this year. If revenue continues to decline at this rate, the city may very well be forced to lay off additional employees, even with the passage of Issue 10. As for 'last time this issue came up,' last year's tax measure was simply a renewal, not an increase. Circumstances last year did not account for the current national recession, the largest since the Great Depression.

Q: Why doesn't City Council put something on the books saying this is what the money is used for because the people of Elyria don't trust the mayor?

Grace: On Aug. 3, 2009, City Council passed Resolution 2009-11 addressing Issue 10 funding. The resolution states 80 percent of the revenue will fund existing services, 7.5 percent will fund additional street maintenance, 7.5 percent will fund Police Department services and 5 percent will fund Parks & Recreation programs.

Q: If Issue 10 is in response to the sudden and dramatic downturn in the economy, why is this proposed to be a permanent tax increase? Why not make it temporary?

Grace: Issue 10 is a 0.5 percent permanent city income tax. Over the next 4½ years, it will raise the city income tax rate from 1.75 percent to 2.25 percent, after which the current 0.5 percent temporary income tax will expire and the income tax rate will return to 1.75 percent. In order for the income tax rate to continue at 2.25 percent, it will require approval by Elyria voters within the next 4½ years. Should Elyria's economy fully recover, City Council and especially Elyria voters may choose not to renew the existing 0.5 percent temporary income tax or may perhaps replace it with a lower amount.

Q: Even if this tax increase is approved, it doesn't seem to fix all of Elyria's financial problems. What are specific near-term and long-range plans to control future spending and reduce costs?

Grace: For the past 10 years, the city has continually reduced expenses. This has largely been accomplished by cutting full-time employees from 530 in December 1999 to the current staff of 447. Recently, the city closed its jail to reduce expenses. This will present logistical challenges for the Police Department; however, it will still save the city money on an annual basis. In recent weeks, the city has consolidated fire operations by moving out of the Broad Street Station and moving administrative functions back into the Cedar Street station. Additionally, fire dispatch duties were turned over to the Lorain County 911 dispatch center. This move is improving response times as well as saving the city the expense of more than three firefighters.

Q: Is the mayor willing to take a pay cut if the issue passes?

Grace: Last year, the city auditor, city law director, mayor and City Council members received no pay increase. This year, the law director and auditor have been donating back to the city a portion of their wages, and the mayor has been donating to the Cascade and Elyria Parks Endowment Fund the equivalent of 10 percent of his wages. The mayor has also been donating back to the city one-third of his car allowance. Additionally, employees that work for the mayor, law director, auditor and clerk of council have voluntarily accepted furloughs this year that amount to a 10 percent pay cut.

Q: Will the mayor stop trying to flip houses for a profit if the tax increase passes?

Grace: In an attempt to help rejuvenate a neighborhood and to act as a catalyst, three years ago the city purchased a home with the intention of bringing it up to code and making it an owner-occupied dwelling in the neighborhood. The additional goal was to recuperate the money invested and continue the program. Due to the depressed housing market, the city was unable to recoup its entire investment. It was still a relative success in that it did help to improve the overall value of the houses on the street. It is very unlikely that the city will make a similar attempt any time soon. It should be noted however, that a federal program began this year that provided the city of Elyria approximately $2.5 million to do just what we attempted to accomplish. In fact, the federal regulations all but require the city to sell the rehabilitated home for a price below market.

Q: I have been told by an Elyria fireman that they would not vote for the increase because of the way the city spends money. How can we vote for something that doesn't even have the support of everybody the increase is supposed to save?

Grace: Issue 10 is about Elyria - its present and its future. Regardless of where people work, not everyone is happy with their boss or their employer. We, as residents of this community, should not allow a handful of disgruntled employees compromise the well-being and future of our community.

Q: What is the precise wording on the ballot (designating how money is to be used)?

Grace: "Shall Ordinance No. 2009-178, providing for an additional municipal income tax of one half of one percent (1/2 of 1%) to provide additional funds for operations in the City of Elyria, Ohio, effective January 1, 2010, be adopted."

Q: How much could be saved by closing Parks and Recreation (including the ice rink)?

Grace: Over the course of this year, programs within the Parks and Recreation Department have either been reduced or fees have been increased in an effort to provide only programs that pay for themselves. This has largely been accomplished this year. Going into next year, with very little exception, programs will only be offered that will pay for themselves. As for the ice rink, this program pays for itself.

Q: What steps are being made with city unions to make concessions?

Grace: There have been many hours of discussions over the past several months with various city unions asking that they make concessions. Several unions offered, and City Council accepted, that for next year they receive no pay increase. Concessions beyond no pay increases have been discussed, particularly changes to longevity, and they have all agreed to discuss options over the next year.

Q: How many layoffs will take place in administration before police are laid off?

Grace: The Safety Service Department that is an extension of the mayor's office has, over the last 10 years, reduced its workforce by 25 percent, from eight employees to six employees. Over these 10 years, their responsibilities have increased and their work is done with fewer people. The same can be said for the Auditor's Department that has reduced its staff by a similar amount.

Q: I understand longevity pay for the unions. I don't understand why elected official receive it. Do we save the city money by not voting in incumbents?

Grace: City Council recently passed an ordinance that discontinues longevity pay increases for existing full-time elected officials and eliminates this pay for newly elected city officials.

Q: Why are some salaries taken out of the water fund? I thought the increase in rates was for improvements, not salaries.

Grace: The water and sewer funds are used for operating expenses as well as capital improvement and maintenance projects. Some of these projects are contracted out to private companies who successfully bid to do the work. Some projects and maintenance is provided by city employees. Due to layoffs this year, the city has been unable to use part-time workers that it has previously relied upon. Some employees that were laid off in general fund departments were rehired to work in these special fund departments to do work that is required to properly maintain these departments.

Q: How much stimulus money has the city gone after? Any received? Used for what?

Grace: This city applied for approximately $75 million worth of projects that ranged from roads, sewers, water lines, waste treatment and water treatment improvement projects. The city was awarded approximately $3 million for road improvements to state Route 57, East River Street and Gateway Boulevard. The city received approximately $100,000 for the Police Department and has applied for more money that is still being considered. Soon the city will be applying for money to fund the rehiring of laid-off firefighters. The city was also awarded approximately $500,000 for energy conservation improvement projects that should arrive some time next year.

Q: Why won't the city follow the recommendation to sell the fire truck that has never used to help curb the pending layoffs? The truck is worth more than 10 percent of the assumed increase in revenue next year should the tax pass.

Pileski: The city issued $1 million in short-term general obligation bond anticipation notes to purchase the truck in question. If the city were to sell the truck, we would be required by law to use the proceeds from the sale to retire the outstanding debt on the truck. The proceeds could only be used for operations if the truck were already paid off.

Q: How much annual revenue is generated by the current 1.75 percent income tax?

Pileski: In 2008, the current 1.75 percent income tax generated $21,038,997.23. Of that amount, $17,973,231.71 was receipted in the general fund and $3,065,765.52 was receipted in the police levy fund.

Q: What percentage of the current budget is funded by income tax revenue? What funding makes up the rest?

Pileski: The general fund budget is currently at $30,800,779. The funding sources and respective percentages of the budget are as follows:

Income tax revenue: 56.14%

Property tax revenue: 4.96%

Other state and local tax revenue: 11.58%

Intergovernmental grants: 0.81%

Charges for services: 6.79%

Fees, licenses and permits: 2.12%

Debt proceeds: 4.87%

Fines and forfeitures: 1.56%

Interest income: 0.26%

Special assessments: 0.05%

Miscellaneous: 1.36%

Reimbursements: 3.40%

Cash carried over from 2008: 6.10%

TOTAL: 100.00%

Q: For the city government, what are the sum totals for base pay, overtime bonus pay and longevity pay?

Pileski: The total gross payroll for the city of Elyria in 2008 was $32,095,488.78. The funds where payroll is charged are the General Fund, Street Construction M&R Fund, State Health Grant Fund, Block Grant Fund, CHIP Grant Fund, Muni Court Technology Fund, Muni Court Security Fund, Special Traffic Magistrate Fund, Food Service Operations Fund, Dental Health Grant Fund, Swimming Pool Inspection Fund, Police Levy Fund, Water Fund, Special Parks & Recreation Fund, Sanitation Fund, Wastewater Pollution Control Fund, Workers' Compensation Fund, Wagner Trust Fund, Findley Trust Fund and the Cemetery Maintenance & Improvement Fund.

Q: Many residents work in another city with a 2 percent tax and, therefore, will receive a credit for the first 2 percent of the total 2.25 percent Elyria income tax. How much of the $5.6 million generated by the tax increase will come from the first .25 percent and how much will come from the second .25 percent?

Pileski: This is probably the hardest question to answer out of all that were submitted. If you were to break down the proposed .5 percent income tax increase into two .25 percent increases, the second of the two, which would bring the total tax rate to 2.25 percent, would generate more because those residents that work in a 2 percent city would be required to pay the difference of .25 percent (2.25 percent minus 2 percent) to Elyria. Thus, the city would be bringing in more taxpayers resulting in more tax revenue. How much more is hard to determine, but I will consult with the Regional Income Tax Agency to see if an estimate can be determined.

Contact Lisa Roberson at 329-7121 or

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