Toledo is neither most nor least taxed big city in Ohio, study shows

1/10/2005

Toledo would be the richest city government in Ohio if it had Youngstown's income tax, Cincinnati's property tax, Akron's trash collection fee, Cleveland's sin taxes, and Columbus's hotel-motel tax.

On the other hand, if some of those cities had Toledo's 2.25-percent income tax rate and its "special assessments," they'd be the richer ones.

A comparison of city tax structures in Ohio prepared by Michael Beazley, former Toledo City Council clerk and now Lucas County administrator, found that no two large Ohio cities have identical tax systems.

It also showed that Toledo is neither the most taxed nor the least taxed major city in Ohio.

But Mr. Beazley contends the chart shows that the cities most similar to Toledo - Akron, Dayton, and Youngstown - have heftier tax packages.

"If Toledo had the same tax package as Akron, Toledo's local government would have about $15 million more to spend on services each year," Mr. Beazley said.

Currently, Toledo's general fund operates on $223.6 million a year.

The chart is going to be studied by Toledo City Council this year for clues as to whether the city should consider an increase in taxes.

"I hope by midyear we'll have an idea what to propose," Council President Louis Escobar said.

The city tax comparison, obtained by The Blade through a request made under the Ohio Public Records Act, was started when council members trying to figure out how to resolve a $16.8-million budget deficit began asking whether other cities had refuse-collection fees.

Mr. Beazley said he was not advocating a tax increase, and he cautioned that the chart did not examine the role of counties in funding municipal services - something that varies around the state.

"Toledo's goal has been to live within the current tax structure," Mr. Beazley said.

According to the survey, Toledo's 2.25 percent income tax is the same as Akron and Dayton. Only Youngstown, which recently increased its income tax to 2.75 percent, has a higher income tax rate among Ohio's major cities.

Mr. Beazley said Cleveland, Columbus, and Cincinnati benefit from large numbers of non-city residents who work and pay taxes there - proportionately more than in Toledo.

Columbus supplements its income tax with a 5.1 percent hotel-motel tax. The City of Toledo has no such tax. And Cincinnati charges a 3 percent admissions tax on events, while Cleveland charges an 8 percent admissions tax. Again, Toledo has no admission tax.

The income tax, imposed on wages and business profits, is Toledo's major source of revenue to fund police, fire, criminal justice, parks, city administration, and capital improvements. The tax is expected to generate about $156 million in 2005 - supplying nearly 70 percent of the city's general fund budget.

Because of Toledo's economic doldrums, the income tax has failed to keep pace with rising city costs over the last four years, forcing the mayor and City Council to cut jobs, programs, and purchasing in each of the last three budgets.

Aside from the income tax, each city has a different mix of taxes.

All of Ohio's major cities receive some property-tax revenue. Toledo has 4.4 mills of property tax - unchanged since 1933, expected to generate about $17 million in 2005. A mill is a dollar of taxation for each $1,000 of assessed valuation.

Columbus and Youngstown collect 3.14 mills and 3.7 mills respectively, while Akron, Cincinnati, Cleveland, and Dayton all collect between 9 and 12.7 mills of property tax.

If Toledo had Cleveland's 12.7 mills tax, the city would have an additional $33 million a year in revenue.

Like Cleveland, Columbus, and Cincinnati, Toledo does not charge an extra fee for trash collection. Akron, Dayton, and Youngstown do. Akron's is the highest, at $15.20, and set to rise to $17.50 in 2006.

But if other cities have higher property taxes, refuse collection fees, and admissions taxes, Toledo has the most aggressive special assessments, according to the survey.

Toledo assesses homeowners for a wider variety of services than any other big city in Ohio, according to the council survey. Those services include street lighting, street cleaning, snow plowing, leaf collection, tree trimming, street surface treatment, alley cleaning, and weed cutting.

The assessments, which are collected along with property taxes, are expected to generate more than $26 million in 2005.

Akron has the most similar special assessments to Toledo, covering many of the same services, excluding tree trimming.

Mr. Escobar said Mr. Beazley undertook the survey in response to questions from him and Councilman George Sarantou, who is chairman of council's finance committee, about other cities' financial conditions.

One idea Mr. Escobar wants to consider is to charge an "event tax." He said Toledo can't keep cutting services, or justify reducing the pay and benefits of employees.

"Whether we like it or not, the revenue we have right now is not enough to keep the city running," Mr. Escobar said. "We have not raised taxes in the city of Toledo in 22 years. The burden [taxpayers] feel is not from us; it's from all the other entities.''

In fact, the city has raised a variety of user fees, on courts, building inspections, fire inspections, cable television, and fire department responses, all to supplement the general fund.

In 2003, the city added a new assessment of 32 cents per frontage foot for 10 years to finance the purchase of new vehicles for snow and leaf removal, street sweeping, and street maintenance.

Mayor Jack Ford said he's not convinced the city is undertaxed.

He noted that Akron's city government collects only 2 percent of the 2.25 percent income tax. The remaining 0.25, which took effect in 2004, is earmarked by city charter as the local contribution for the debt on the Akron school district's $800-million school building program.

"Toledoans have made it pretty clear they don't want to see a rise in taxes," Mr. Ford said. "They appreciate the cost-cutting we've been doing."

Mayor Ford in the past has supported some proposed revenue enhancements, such as a so-called "sin tax" on beer, wine, and cigarettes to finance an arena, or a $5 monthly trash-collection fee. Both proposals were dropped.

In recent months, the mayor has taken a harder line against tax increases.

He said the city government had too many employees throughout the 1990s and was due for downsizing when he took office.

The mayor said he and City Council have cut $17 million in spending since he took office with no noticeable reduction in services.

Tom Crothers, city finance director, said there is no plan that he's aware of to increase a major tax.

"The citizens can only bear so much. It's how you apportion it," Mr. Crothers said.

"The main focus of ours, including City Council and the mayor and [Economic and Community Development Director] Bill Carroll, is increasing our job base here. And when we're able to do that, we'll have some growth."

Any plan to raise taxes in Toledo is likely to draw opposition from not only some citizens but from the Toledo Area Chamber of Commerce. Carol Van Sickle, the chamber's vice president for public affairs, said the city will have to do a better job of proving that it is operating as efficiently as possible with the money it has.

"We can't afford to drive jobs out," Ms. Van Sickle said.

But Mr. Escobar said that the city needs more revenue to operate.

"I have come to the conclusion that we have to do something," Mr. Escobar said.

Contact Tom Troy at: tomtroy@theblade.com or 419-724-6058.