Lisbon to seek increase in income tax for police
LISBON — Village Council is going with an income tax increase instead of a property tax to provide extra funding for the police department.
Council approved a resolution at this week’s meeting authorizing Village Solicitor Alec Beech to draft legislation for a ballot issue that would ask voters to increase the village income tax from 1.5 percent to 2 percent. The legislation is being drafted for the next meeting on June 25, when council will vote to put the proposed tax increase before voters in the Nov. 5 election.
Six weeks ago, council adopted a resolution to begin the process of placing a 3-mill police levy on the ballot but never took any further action. Council President Dawn Thomas said after this week’s meeting they decided to go with an income tax instead because they believe it is the better option.
“In order to get what we need for the police department and keep the police department competitive with other departments and to end the revolving door there, this should solve the problem,” she said.
Council began pursuing a levy at the request of police Chief Mike Abraham, who says the extra money is needed so officer pay can be raised to a competitive level and slow the loss of officers to better-paying police departments that also provide health insurance coverage for employee dependents.
A 3-mill levy was expected to generate $100,000 a year, which Abraham said was not enough to address the problems for very long. Because levies cannot generate any more funding than when first passed by voters, this left the village with the option of placing a much larger levy on the ballot or asking voters sometime in the future to approve a second police levy.
Abraham said neither were good options, which is why he began asking council to consider going with an income tax increase. After meeting with council several times in closed session, he convinced them to go with the income tax.
The 0.5 percent increase, which is permanent and not subject to renewal, would generate an estimated $383,000 based on 2018 income tax collections. A portion will be earmarked for the general fund, and Fiscal Officer Tracey Wonner has recommended it be 25 percent.
The plan would to be use that 25 percent to tackle road projects and other capital improvements beyond routine maintenance. “It would give us the opportunity to do the things we have been wanting to do but have been unable to, and putting that money in the general fund would give us the flexibility to do that,” Wonner said.
Unlike a levy, income tax revenue can grow if the village attracts more businesses that create jobs, but almost all of the non-government development over the past 25 years has been just north of town in Center Township. As a result, village income collections have remained mostly flat for the past decade or more.
Thomas said another reason they are going with the income tax increase is because it would pose less of a financial burden on elderly property owners in town than a levy. The income tax is only assessed on earned income, and retirement income from such sources as Social Security are exempt.
“We’re just looking to be as fiscally responsible as we can and for those who are paying as well,” she said.
Abraham said one of the advantages of an income tax increase is those people who work in town but live elsewhere would pay.
“We think this is a fair way because of the number of people who work in the county seat and use the services, in some instances more so than residents, and they should help pay,” he said.
Lisbon residents who work elsewhere would be subject to the increase as well, unless there is a reciprocity agreement with the town where they work.
Wonner said the income tax has been at 1.5 percent since at least the early 1990s, when she started with the village.