Coldwater school board seek steep hike in tax

COLDWATER - School board members seek to more than triple the income tax rate to 1.75% to help offset deficit spending that has afflicted the district the last few years.

Board members at Tuesday night's special meeting signed off on a resolution requesting certification of a levy that would replace the existing 0.5% traditional income tax with a 1.75% earned income tax.

It's the first step toward placing the replacement levy on the primary election ballot next spring.

The current 0.5% traditional income tax first passed by voters in 1999 brings in about $1 million annually, according to treasurer Jenn McCoy.

Revenue from the proposed replacement earned income tax, if approved, would go toward general operating expenses, McCoy said.

Unlike a traditional income tax, an earned income tax applies only to employee compensation and net earnings from self-employment, according to the Ohio Department of Taxation.

"It will take us three years to actually receive the full amount of that income," she said. "Once we start receiving that full amount, we'll be getting about $3 million (annually)."

If the levy fails, the current traditional income tax would remain in place, McCoy said.

McCoy shared that the district has been in deficit spending mode since fiscal year 2021. By the end of the school year, deficit spending is pegged at $400,000.

Though a seemingly large tax hike, McCoy noted that the district will drop a 0.5 mill bond maintenance levy in fiscal year 2024. Also, board members don't plan to renew the current emergency levy in fiscal year 2026, she added.

Levy chair Brad Niekamp at a special board meeting in July said he believed a levy is necessary for the district to operate at an optimal level.

"Having seen the financial reports, it is clear that a levy should have been considered and attempted some time ago, but was not," he had said. "As such, it is imperative now to move forward with a levy. If we do not, our students will suffer."

Under the advisement of their previous attorney, school board members in July approved a 1.25% increase to the current traditional income tax on the Nov. 7 general election ballot.

However, they ran into issues and had to nix their plans.

"We were going to add an earned income tax and our attorney gave us some misinformation and told us we could have both types on," vice president Terry Schroyer said. "But we found out that we couldn't."

If approved by voters, the proposed replacement levy should help carry the district through 2030, McCoy said.

The next regular board meeting is 6 p.m. Nov. 21 in the high school CAV room.