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More FAQ's on Proposed Income Tax Increase
Tuesday, October 28, 2003 12:00:00 AM - Monroe Ohio
The following questions address many of the issues concerning Monroe’s proposed .5% income tax withholding increase and its effect on the Police and Fire Departments. This information is intended to provide the voters with important facts surrounding this issue so you may make an informed decision on Election Day.

Q. How are the Police and Fire Departments affected by the passage of the proposed .5% income tax increase?

A. The ballot language contains a provision that earmarks 1/3rd of all future annual income tax revenue for the exclusive use of the Police and Fire Departments. (Example: $3,900,000 annual income tax collected = $1,300,000 dedicated to Fire and Police).

Q. Why is this 1/3rd Police and Fire Department provision important?

A. It is important because the Police and Fire Departments account for approximately 60% of all General Fund spending. Essentially, the Police and Fire Department funds are not able to support their own operations from monies generated by the safety service tax levies currently on the books. This means the difference must be paid through the City’s General Fund.

Q. How are the Police and Fire Departments Funded?

A. In city government finances, most sources of funding are earmarked for specific
purposes. The Street Fund must be used for streets, the Water Fund must be used for water utility services, etc. The City General Fund has the most flexibility in how it can be spent, and as a result is spread quite thin covering core government services such as fire and police service, and emergency medical services. The proposed income tax increase would create the revenue needed to free up the General Fund for future infrastructure and equipment investments required to maintain our current level of service.

Q. If the income tax increase passes, how do the Police and Fire Departments benefit?

A. The new income tax revenue (estimated at approximately $680,000 for 2004) would greatly reduce the burden on the City’s General Fund. The Police and Fire Departments would have a dedicated revenue source that could not be altered. This provides additional monies to be spent on anticipated future safety service equipment needs and provides additional money for future staffing additions to maintain our existing response times.

Q. Why is there a need for additional money for Police and Fire services?

A. We all know our safety service functions are among the most vital services we provide to our citizens and businesses. Our increased growth has placed added pressure on maintaining current service levels by these departments. Our Police runs have increased over 60% from just the year 2000. In 2000, the Police Department answered 6,311 calls and the estimated 2003 figure is 10,120.

The Fire Department has also seen their runs increase since 2000 by approximately 20%. In the year 2000, the fire department made 1,505 runs compared to an estimated 2003 figure of 1,800. We realize that our City is in the midst of our largest growth period until we achieve residential build out within the next 12 –15 years. It is likely that additional staffing may be required in the future and the new income tax revenue will be needed for that to occur. Without the new revenue, we anticipate the need to request future safety service property tax levies to fund these safety services. A property tax levy is not our preferred funding choice since it affects so many more residents, as compared to an income tax increase.

Q. If we are experiencing such growth, why do we need to raise the income tax rate?

A. We are increasing our current income tax collections every year through new businesses moving into the City. However, this added revenue is being outpaced by the cost to supply all our current City services. Even after cutting over $2.3 million dollars from the 2003 and 2004 budgets, we anticipate revenue shortfalls for the ongoing capital improvements we need to perform in order to keep up with the demand. If an income tax increase fails, we will be forced to seek property tax levies to fund future capital improvements.

Q. What are the alternatives if the income tax increase is not passed?

A. The Police and Fire Department activities are among the core services we provide to our citizens and businesses. Therefore, when funds are limited, we first cut back in other areas so the core functions are minimally impacted. Some examples of non-critical spending areas are: park development, street repaving, leaf pick-up, etc. If new revenue is not created, we will have to delay or cut other non-critical improvements in the future resulting in reduced services for our citizens.

Q. Will future Safety Service property tax levies be pursued by the City?

A. City Council chose the income tax increase over a safety service property tax levy because it affects the least amount of Monroe residents (approximately 1/3rd of all Monroe residents who work would pay more tax). A property tax levy affects every landowner in the City. Increasing the income tax to 1.5% will greatly reduce the need for future property tax levies in all areas, especially safety service. It is our long-term plan that the continued development of the City’s many commercial and industrial properties will provide the income tax base required to fund City operations without the need for additional property tax levies.

Q. Who is specifically affected by an income tax increase?

A. Any individual working in Monroe is subject to income tax withholdings. Those affected include approximately 1/3rd of our residents who work are currently employed in Monroe or other jurisdictions that have no income tax or a lesser income tax than Monroe. The other 2/3rd of our working residents are employed in other cities and villages and pay income tax to those jurisdictions. The overwhelming majority of our income tax collections are withheld from individuals who are employed in Monroe, but live in another community.

Q. Are retired Monroe residents affected by an income tax increase?

A. No. Monroe retirees who are not employed pay no local income tax.

Q. Is the proposed .5% income tax increase a property tax levy?

A. No. If passed, the .5% income tax increase would bring our existing 1% income tax
rate to 1.5%. Our income tax only affects residents working in Monroe or other jurisdictions that have no income tax or a lesser income tax than Monroe (approximately 1/3rd of all working residents). A property tax was not considered because it would affect all residents owning property in Monroe.

Q. Will my property taxes go up if the tax increase is passed?

A. No. Because the income tax is not a property tax levy, your property tax bill will not be affected by any income tax increase.
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