Shelby City Council experienced resistance from residents at Monday night’s City Council meeting regarding legislation that would decrease the city’s income tax credit.
At the Feb. 17 city council meeting, Councilwoman Pat Carlisle sponsored a proposed ordinance that would decrease the tax credit over the following years: Shelby residents who live in the city and work out of Shelby would earn a 67 percent tax credit for 2014, a 33 percent tax credit for 2015, and a zero percent tax credit for 2016.
Shelby Mayor Marilyn John explained that the proposed tax credit decrease is due to the city experiencing a recent heavy loss of income.
“We as well as every local government have experienced a reduction of revenue,” said John. “We also experienced a huge cut in local government funding we get from the state. We are looking at a potential deficit in our General Fund, if not this year then next year.”
According to the City of Shelby’s website, the city tax rate was revised starting Jan. 1, 2014. Currently the tax rate on earned income will be 1.50 percent. Residents who live in Shelby and work in other municipalities will no longer be allowed credit up to Shelby’s tax rate; credit will be limited to one percent on taxes withheld and paid to other municipalities. However, a 50 percent income tax will be due from all residents who have earned income regardless of what municipality they work in. The site noted the increase is a result of the voters of Shelby passing an income tax to build a new Justice Center and a Paving Levy.
“Starting this year we have a 1.5 percent income tax for the city,” explained John. “Of that 1.5, you get a ‘forgiveness’ of one percent. So two thirds of the 1.5 is forgiven because you live in Shelby and pay income tax someplace else.
“Nobody in Richland County has full forgiveness, and some cities have zero forgiveness,” John continued. “We are looking at making an adjustment on that forgiveness and lowering it from the one percent down to something below that, to make up for revenues that we have lost.”
At City Council’s Feb. 17 meeting, Councilman Harold Shasky argued a portion of Shelby citizens who live in Shelby and work out of town will now be double taxed as they will be having taxes come out of their paycheck in the city they work as well as tax money going to Shelby. Five residents spoke during public comment at City Council on Monday to call attention to that very fact.
“I drive 75 minutes one-way to a job because quite frankly, there are no opportunities here,” said resident Edwin Tharp, who moved to Shelby four years ago. “I’m a working professional and I can’t find good employment here. I can’t afford to go down the road and make $9 an hour and make it. And now you’re going to double tax me? I don’t understand it.”
Longtime Shelby resident and Tharp’s mother-in-law Wendy Buchanan added if Tharp and his family are forced to move out of Shelby due to the double taxation, she would be moving with them. Leaving Shelby was an option mentioned more than once among the public.
“My husband made a comment today about moving out of town, and he grew up in this town,” said resident Linda Stentz. “But I don’t know where we’d go because we can’t afford to sell our house, because nobody is going to want to buy in Shelby, because you guys keep taxing us to death.”
Stentz explained she makes $9 an hour doing home help for clients in Shelby, Mansfield, Ontario, Galion and other surrounding areas. Her husband was one of the Voisard Manufacturing employees who lost their jobs when the company closed its Shelby and Shiloh locations on Jan. 31.
“Right now I have no idea where the money is going to come to pay his portion of the city taxes,” said Stentz. “And then if you repeal this, it’s going to affect me too because I don’t have hardly any clients in Shelby. And in Ontario and Mansfield, they have higher taxes than over there, so then you’re almost triple taxing me. And it’s not fair. I’m not making that much money and it’s hard to make ends meet.”
Shelby resident Darrell Smith, who works in Mansfield, said revoking the one percent tax credit would mean he has to pay an additional $500 a year.
“I believe in supporting my community, I shop here and do all that when I can probably shop in Mansfield for a lot cheaper, but I support my community and I do believe in that,” said Smith. “I voted for your school tax and I voted for the roads, I believe in supporting what needs to be done in the community. I don’t want to go. But you’re taxing me out of here.”
Other adjustments have been made by the city, but ultimately John said Shelby must either cut expenses or increase revenue in order to get back in the black. At the end of 2013 the city was in the red by about $5,000, and every government entity with the exception of the federal government must have a balanced budget.
“When it comes down to cutting, almost 80 percent of the General Fund is safety services, fire and safety protection,” said John. “We live in a very safe community, so we don’t want to see that happen. We are looking at what we can do, but you either have to cut expenses or increase revenue, and almost 90 percent of the General Fund is wages and benefits for people, including City Hall workers. And we’re already down two people in City Hall.”
The tax credit as well as the city’s financial state will be discussed in detail during a Committee of the Whole meeting on Friday, March 7 at 2:30 p.m., which will give Shelby residents an opportunity to have one-on-one conversations with city officials.
John noted public comment during City Council meetings is a time for residents to speak to Council and be heard but is not intended for debate, and said public comments were not addressed during Monday night’s Council meeting due to the upcoming Committee of the Whole meeting.
“Nobody wants to increase any taxes on residents; it’s not something that we want to do,” said John on Tuesday. “Last night two individuals who stood up and spoke talked about what a great community we live in. I completely agree, and unfortunately all those things come at a cost. So we have to decide as a community, what is the priority? And those things are tough to decide.”
“We as well as every local government have experienced a reduction of revenue,” said Mayor Marilyn John. “We also experienced a huge cut in local government funding we get from the state. We are looking at a potential deficit in our General Fund, if not this year then next year.”
