Powell voters will be asked to raise taxes
City dealing with street repairs, traffic, more
The city of Powell has traditionally claimed bragging rights to the lowest income tax in central Ohio.
But at 0.75%, on the books for decades, there has been ongoing debate about raising the rate in order to stave off costly effects of the city’s growth, such as street repairs and traffic congestion.
On Tuesday, the Powell City Council unanimously approved a resolution that will permit voters to decide on May 4 if more than doubling the rate, to 2%, would help.
Many on council are averse to higher taxes, reflecting their conservative constituents; the vast majority of residents work outside of Powell, city spokeswoman Megan Canavan said.
The proposal actually would be a net savings for those Powell residents who work in Dublin or Columbus, which have higher income taxes, due to a shifting of the tax credit workers can seek.
The proposal approved Tuesday raises the credit for taxes paid to another municipality to 100%. Currently, residents who pay taxes to another municipality receive a 0.25% credit, meaning they pay 0.5% to the city of Powell plus an additional tax to the city where they work.
That means a Powell resident working in Columbus or Worthington, both of which have 2.5% income tax rates, who currently pays a combined 3% in income taxes would pay nothing to Powell and pocket the other half-percent.
But those working in the city would have their income taxed at 2% instead of the current 0.75%.
Pam Miller, executive director of the Powell Chamber of Commerce, said she has not yet heard from many residents but expects that to change.
She said local businesses are struggling, and she is preparing to roll out a new marketing campaign along with other stimulus measures.
She also knows that the city is struggling.
“In order to keep facilities nice, they need to keep up with the times,” Miller said. “They’re going to have to do something.”
Those receiving Social Security or pension income do not pay the taxes.
If approved, the measure would generate an additional $3.4 million for public safety, economic development, operational efficiencies and capital improvements,
It would go into effect on Jan. 1, 2022. The city estimates that 80% of the new funds will come from people who work in the city but live elsewhere, because of the smaller percentage of people who both live and work in Powell.
The funds leaving the city are a hardship, City Manager Andrew White said.
“We have roughly $2.2 million in tax dollars that leave Powell (annually) because
the other community has a higher rate,” White said.
“Council sees this as an opportunity to restructure the current tax distribution among the residents,” Powell Mayor Frank Bertone said in a written statement. “Many residents feel the current tax burden is too high considering the taxes residents pay to other municipalities and the city of Powell.”
White said, “The income tax has remained unchanged at 0.75% for three decades during a period where the city has grown rapidly.”
Powell has one of the lowest effective tax rates in Ohio. Out of 28 comparable central Ohio cities, Powell’s current income tax credit, ranked 21st, is “among the least-beneficial in the region,” White said.
The city debated the issue two years ago before sending a measure to voters to raise the rate to 1.15%. Voters rejected the issue with 59% of the vote.
“A primary finding from the 2018 Citizen Financial Review Task Force Report is that the city no longer collects sufficient revenue to maintain existing capital infrastructure, such as streets and other essential services,” White said. “The current rate of 0.75% is not competitive in the region and causes a loss of $2.8 million in annual revenue.”
Powell’s most-costly needs are its 120 lane miles of streets, 77 miles of storm sewers and 24 miles of bike paths, White said.
According to U.S. Census estimates, the city has about 14,000 residents, growing at about 2% annually since 2017. It has a median household income of more than $157,000, among the state’s wealthiest cities. The average commute time for workers is 26 minutes, indicating many work elsewhere.
The city has maintained that heavy residential growth during the late 1980s and early 2000s created new neighborhoods and roads that need to be maintained.
Revenue from those development projects, such as tax-increment financing deals, expired long ago and has worsened an already tight city budget. In addition, cuts to the state’s Local Government Fund, elimination of the estate tax and reduced gas taxes have hurt city finances, White said.
“Failure to address the issue will delay infrastructure investments, squeeze operational resources and eventually reduce service delivery, which impacts quality of life,” White said.
Resident Nico Franano, who spoke against the rate hike two years ago, thinks the rate should be even higher.
“Two percent doesn’t get you there,” he said, noting that many other suburbs now are taxing at 2.5%. “I think it (the tax credit) should be paired with a rate that will do the job, because it will be very difficult to go back for a future tax increase,” when the credit can’t go any higher.
“Just getting by is politically wise, but may push the problem into the future,” he said. dnarciso@dispatch.com @Deannarciso