Toledo officials ask for permission to reallocate revenue

10/30/2004

Toledo city officials are asking voters to renew the 0.75-percent temporary income tax a year early on Tuesday and are hoping voters give it the same strong support they have since 1982.

The difference that could change voters' attitudes this year is that less of the money would go into permanent capital improvements than in the past. Instead, more of it would go to funding the city's annual operating costs.

"We face some significant challenges," Mayor Jack Ford said, citing threats from the state to cut the local government fund and the continued flat performance of the city's income tax.

"If everything comes to pass, we're going to need a source of funding to balance the budget. I'm not going to support a money grab, but I do have to balance the budget," Mr. Ford said.

The mayor's top staff has for months warned that layoffs of police and firefighters are possible in order to stem the city's deepening fiscal problems.

And no commitment has been made that passing the tax issue on Tuesday would avert layoffs in 2005.

But they say passing Issue 5 will lower the chances of severe cutbacks in public safety.

The 0.75-percent tax generates $52 million a year - 22 percent of the city's total general fund revenues. The city also has a permanent 1.5-percent income tax, for a total tax on income of 2.25 percent - or $2.25 on every $100 earned in the city.

The current 0.75-percent tax is not scheduled to expire until June 30, 2006, but City Council voted to put it on the ballot this November instead of next November to get voter approval to change the distribution formula.

If the issue is defeated, the city would have several more chances to get it on the ballot.

Under the existing formula, one third of the 0.75-percent income tax is allocated to capital improvements, which pays for long-term improvements on city-owned property, roads, buildings, and equipment. Under the revised formula proposed for voter approval Tuesday, only one-sixth of the tax would have to go to capital improvements.

That means council could transfer an additional $8.75 million into the general fund toward the projected $14 million deficit next year.

The mayor and members of council have said they won't use the full amount available, preferring to use only $4 million.

Advocates for the revised distribution have downplayed the likely impact on the city's capital improvements budget, saying street paving and bridge repairs would continue to get the money they need, while the impact would likely be felt in parks and downtown development projects.

The income tax was approved by Toledo voters during a fiscal crisis in 1982.

The tax was approved by voters again in 1985 and every four years since then, making the "thank you" bumper stickers on city vehicles a familiar sight to Toledo motorists.

Contact Tom Troy at:

tomtroy@theblade.com

or 419-724-6058.