City of Lyndhurst, Ohio Finance Committee
Agendas & Minutes
October 15, 2012: Finance Committee
The Finance Committee will meet on Monday, October 15, 2012 at 7:00 p.m. to further discuss the Tax Credit/Tax Rate issue.
Patrick A. Ward, Chairman
October 15, 2012: Finance Committee
The Finance Committee met Monday, October 15, 2012 at 7:00 p.m. Present were Council members Frey, Gambatese, LoPresti, Marko, Packard, Schlessel and Ward. Also present were, Mayor Cicero, Finance Director Kovalchik, Law Director Murphy, Chief Carroll and Chief Porrello. The purpose of the meeting was to continue discussion on the topic of the Income Tax Credit/Income Tax Rate Issue.
Finance Director Kovalchik distributed a "Tax Rate Scenario Chart" for discussion purposes showing the impact of a variety of approaches, eliminating the Income Tax credit, raising the Income Tax rate or combinations of the two. She explained that the chart was not yet complete as the data for one of the requested scenarios had not come over from RITA and that their formulas and ours were not agreeing. She will provide the Committee with updated charts once all of the data from RITA has been received and she is certain the formulas are correct. She indicated that, according to RITA, there are a total of 11,563 Lyndhurst taxpayers; 9,424 work outside Lyndhurst and 2,139 work and live in the City. Of the 9,424; the largest number work in Cities with a 2% tax rate. The average salary is just under $50,000.**
In response to Mr. Ward's question Mrs. Kovalchik explained that, should Council do nothing until June, the City would not collect $456,000 that would be collected if the .50 Credit was suspended effective January 1st. In answer to a question, she replied that the credit could be eliminated retroactively; however, it is a scenario that RITA highly discourages. Mr. Ward stated that eliminating the credit retroactively, since we are discussing it now would simply make Council look bad.
Mr. Ward directed the Committee's attention to the two pieces of Legislation that Mr. Murphy had prepared in DRAFT form for review. He explained that the first, numbered 2012-78 would eliminate Section 791.26 of the Codified Ordinances. This section is a moot point as it is not applied in practice currently. It would provide a .25 credit to a person from a contiguous community who works in Lyndhurst but, because of the number of detailed qualifying conditions it is unlikely RITA could even figure out a person's eligibility to receive that credit. Mr. Murphy, Mrs. Kovalchik and RITA recommend eliminating the section.
The second piece of DRAFT legislation, numbered 2012-79, deals with the Income Tax Credit as found in Section 791.27 of the Codified Ordinances. Mr. Ward indicated that prior Councils had adjusted and restored the Income Tax Credit back in the mid 1980's, as needed, and asked Mr. Murphy if it wouldn't be possible to word a current Ordinance in the same way as the legislation used at that time. Mr. Murphy indicated that it would be possible. Mr. Ward stated he liked how the section of the Codified Ordinances memorialized the actions of previous Councils. Mr. Murphy indicated the section would reflect the current or recent actions but the prior actions of Councils past could be memorialized in the "Whereas" clauses of any current Ordinance in order to assure it is preserved.
Mr. Ward asked the Committee members if there were any of the Tax Rate Scenarios they would like Mrs. Kovalchik to eliminate from further discussion. It was suggested that the 1.50% Rate with a 25% Credit, the 1.75% Rate with a 25% Credit, the 1.95% Rate with a 50% Credit, the 2% Rate with a 100% Credit and the 2.5% Rate with a 100% Credit be eliminated from the Chart. The 2.45% with a 100% Credit will be retained on the Chart for illustration purposes. Mr. LoPresti asked the items on the Chart be numbered or lettered so the scenarios can be easily matched with the impact chart. Mrs. Kovalchik indicated that it would be done.
In answer to a question posed by resident Richard Clark at a previous meeting Mrs. Kovalchik stated the City is ranked 4, for insurance purposes on an ISO Rating scale. A ranking of 4 is very, very respectable. As to what might happen to a homeowner's own insurance policy should the City's ranking fall, as Mr. Clark had asked, she indicated that the ranking is made up of a number of factors; staffing, equipment, training, the City's Bond Rating and so on. In the Homeowner Insurance market, however, different companies use different formulas - for instance, State Farm has their own ranking system - so Mr. Clark would need to check with his Insurance Carrier to find out if there would be an impact should the City be forced to cut staff and so on.
Mr. Ward allowed a few more audience questions/comments as time allowed.
With no further business to discuss the meeting adjourned at 7:58 pm.
Patrick A. Ward