Council keeps tax credit

CELINA - The city's 1 percent income tax credit for residents who work in other villages or cities will remain.

Council members on Thursday evening unanimously voted against an ordinance to rescind the credit - ending months of speculation and controversy.

During the special meeting, councilman Bill Sell made a successful motion to take the ordinance off of the table - where it has remained since April - and discuss passage or defeat.
  The proposal, projected to bring in an additional $500,000, would have forced some citizens to pay income tax in two municipalities - where they work and where they live. City Auditor Emily Stewart said 28 percent of Celina's tax-filers work outside the city. It would have been retroactive to Jan. 1, 2010.

The general attitude of the public was the ordinance should be voted on one way or another, Sell said.

Celina firefighter Brian Anderson, who is leading a campaign to support the city's proposed income tax levy, said his committee needed council action on the issue so it can accurately inform voters about the financial fallout if the issue fails in November.

The city is facing a $1,056,594 projected deficit for next year in its general fund, and council members approved the placement of a levy on the November ballot. If approved, the levy would increase the city income tax from 1 percent to 1.5 percent effective Jan. 1, 2011, for a period of seven years.

"I feel that if it (the income tax increase) does not pass, we should rescind (the tax credit)," Celina Mayor Sharon LaRue said. "Because we are going to need that money to keep services going."

In order for the city to create a backup plan if the levy fails, it needs to know its anticipated revenue, safety service director Rick Bachelor said.

If the levy fails with the current tax credit policy, the city would need to make about $1 million in budget cuts next year. If the levy fails and the city rescinds the tax credit, it would have to make about $500,000 in reductions, Bachelor said.

"It's people who are going to take the hit," he said, explaining that the fire and police departments would bear the biggest impact.

Sell said he understands the perception of unfairness with the tax credit rescind, but wondered if council members would be negligent in their duties if they did nothing and allowed the city to sink deeper.

Celina Police Sergeant Jim Stelzer recommended that the city put 100 percent of its efforts behind the income tax levy and worry about the rescind later.

Police Chief Dave Slusser echoed that opinion.

"There is no plan B that is going to give us the money to run this city," Slusser said.

Celina resident Jim Moran said he was surprised to learn that council members were even considering a second reading of the tax rescind policy.

"I think it will confuse the voters," he said, adding there is a public perception that the city cannot manage anything.

Rescinding the credit would kill any chance the city has at getting the income tax levy passed, he said.

Moran also called for better communication and financial transparency by the city.

"I will agree there is confusion out there," councilman June Scott said.

Councilman Mike Sovinski said he feels the city is entering a card game with two hands: a set for the levy and a different set with the tax credit rescind.

Councilman Jeff Larmore recommended killing the rescind proposal now and waiting until the end of the year to make the next move. Scott said he agreed with that opinion.

In a rare public statement, council president Jason King - who only votes when there is a tie - said if the tax credit rescind policy isn't fair now, it shouldn't be fair in November if the income tax levy fails.

He also said council members should kill the tax credit rescind policy now, even if it is putting all of the city's eggs in one basket - the prospect of a successful income tax levy.

"I don't think it's fair. I don't think it's right," he said about rescinding the credit.

However, he stressed the city needs a backup plan as soon as possible if the levy fails.

Celina resident Fred LeJuene - a long-time outspoken critic of rescinding the credit - said he personally feels like the residents who work in other villages or cities are being held ransom.

"This needs to be dead in the water," he said.

Council members eventually suspended the rules - allowing them to vote on passage of the ordinance on its second reading - and defeated it.