July 27, 2006

By Diane Chiddister

At the July 17 meeting of the Yellow Springs Village Council, Village Manager Eric Swansen recommended that Council address the current Village budget deficit by putting on the November ballot a property tax increase of $9.83 per mill. That increase would allow the Village to maintain all current services, and would also fund a program of capital improvements that Swansen presented at the meeting.

A mill equals a tax of $1 on each $1,000 of the assessed value of a home. A $9.83 property tax increase per mill would equal about a $300 gross increase on a home valued at $100,000 fair market value, since a home is taxed at its assessed value of 35 percent of its fair market value. The proposed tax hike would be about an 11 percent increase in a local homeowner’s total property tax.

The property tax increase proposal followed Swansen’s presentation on capital improvement needs for the village’s streets, the Gaunt Park pool, the John Bryan Community Center and the library. The total cost of those capital improvement projects was about $905,000.

The tax hike proposal is in response to both the capital project needs and the 2007 Village budget, which has a projected deficit of almost $1 million dollars. While the proposed tax increase would address the budget deficit along with funding new capital projects, they don’t represent the best solution to the Village’s financial problems, Swansen said.

“Taxes will not be the solution long-term,” he said. “We need long-term job growth.”

Along with his recommendation that Council seek the $9.83 per mill increase, Swansen also presented Council with six other scenarios based on six descending levels of property tax increases, with $9.83 the highest increase and the only one which would allow the Village to continue to provide current non-mandated services, such as the pool, the library and the Bryan Center. The scenarios based on lower tax hikes first eliminated the Bryan Center, then the pool, then the library, then street capital projects. The final scenario, in which the Village did not seek any property tax hike, eliminated all non-mandated Village services along with the street capital projects.

Two Council members raised questions about Swansen having eliminated non-essential services such as the pool and library before eliminating capital improvement projects for roads.

“The ultimate solution is to get more jobs,” Karen Wintrow said. “My fear is that slashing any of these things will make that more difficult.”

Yellow Springs is a community that values its children, Judith Hempfling said, and the proposed budget scenarios seemed to place a higher value on pristine roads than on the well-being of children, who receive substantial benefits from having a local pool.

But the Village may no longer be the appropriate entity to provide services such as the pool and library, Swansen said. “Perhaps we can become an advocate rather than a provider of services,” he said.

Overall, he said to Council, “To me we’re at a crossroads on what services to provide. If we have to make cuts, the logical place for them is those places you’re not mandated” to provide.

Council members will discuss the recommendation, along with other tax increase options that Swansen also presented at the July 17 meeting, at a work session on Wednesday, Aug. 2. If Council chooses to put a tax increase on the ballot, it must vote on the measure at its regular meeting on Aug. 7, in order to meet the filing deadline of Aug. 12.

Tax specifics for homeowners
The current budget deficit has likely resulted from a combination of the loss of 185 jobs from Vernay Laboratory several years ago, a loss of population and the aging of the local population, according to a written proposal from Swansen. As they retire, an increasing number of villagers do not pay the municipal income tax, which is the Village’s largest single source of revenue for Village operating expenses. In his written report, Swansen said that a property tax hike is preferable to an income tax hike because it is tax deductible, it is less dependent on the health of the local economy and it provides a better nexus between the people who use services and those who pay for them.

If the $9.83 tax increase were passed, it would mean that homeowners would have a gross impact of $300.90 per $100,000 fair market value on their home, a $752.26 gross impact on a $250,000 home, a $902.71 gross impact on a $300,000 home and a $1,504.51 gross impact on a home with a fair market value of $500,000.

Because property taxes are tax deductable, the impact of the increase is proportionately higher for those in lower tax brackets. The net impact on a home valued at $100,000 would be $270.81 for those in the 10 percent federal income tax bracket, $255.77 for those in the 15 percent bracket, $225.68 for those in the 25 percent bracket, and $195.59 for those in the 35 percent bracket. The net impact of a home with a $300,000 fair market value would be $812.44 for those in the 10 percent income bracket, $677.03 for those in the 25 percent bracket and $586.76 for those in the 35 percent bracket.

Road improvement projects
Swansen led his presentation with a discussion of capital needs for Yellow Springs streets. The village has a little over 20 miles of streets to maintain, he said, and a Village employee recently took a walking tour to closely examine the condition of all village streets. The employee found that 42.6 percent of local streets are in excellent to good condition, 30.9 percent are in good to fair condition, and 26.5 percent are in fair to poor condition.

In recent years, the Village has backed away from consistent street maintenance programs due to budget stresses, Swansen said, and if that trend continues, the streets will decline to the point that it becomes very costly to repair them. In contrast, he proposed an ambitious street maintenance program that he said will preserve streets and end up costing the Village less.

“We need to be more aggressive,” he said. “Let’s put in an amount of money that provides real improvement.”

Swansen proposed adding to the budget $235,000 to repair village streets that are in poor condition, using for funding a combination of low-interest loans and new revenues. He also recommended a pavement management program to maintain streets in good to fair condition, at a cost of $150,000, along with $50,000 for regular street sweeping, which the Village has not had for some time.

Capital needs for the pool
Currently, the Village subsidizes the Gaunt Park pool at about $70,750 per year. Swansen stated that the pool’s capital needs include hiring an outside consultant to examine the system, costs and pool condition, at a cost of $45,000. Other upcoming capital needs include gutter repair, at $160,000, improvements to the pool filter system, at $15,000, and a pool maintenance allowance of $10,000 per year.

Alternative approaches to addressing these needs, according to Swansen, would be collaborating with Antioch College to create a public swim time at that pool, and closing the local pool; fundraising efforts by those who have a stake in the pool; or the formation of a non-profit entity to operate the pool.

Bryan Center, library, others
The Bryan Center roof will need replacement in 10 to 15 years, Swansen said, and the heating and cooling unit may need replacement at some point. He recommended that the Village begin setting aside money for those projects if the Bryan Center continues to be used as it is currently, for community meetings and youth activities.

Maintaining the Bryan Center at its current level of activity costs about $142,500 a year, and with an additional $5,000 set aside for future capital needs, would cost about $147,000 a year, Swansen said. If the Village chose to close part of the center and only maintain Village offices, the annual cost would be about $88,000.

The Village is responsible for operating the Yellow Springs Library building, but not the library’s operations. The library building currently costs $50,000 to operate and maintain, and about $5,000 should be added annually for future roof repair needs, Swansen stated.

Swansen also recommended that $22,500 be set aside every year for police and parks vehicle replacements.

Swansen further recommended that $50,000 be budgeted yearly for economic development, since the creation of new jobs is a local priority. While he said that $50,000 is not enough to hire a special staff person, that amount could be used for consultants or for measures aimed at developing job-ready sites, tackling barriers to new job growth and encouraging business expansion.

Other tax scenarios
Swansen presented six other scenarios for lower levels of tax hikes, along with his suggestions for how each level of tax hike would affect local services. Scenario B, the second highest tax hike, at $8.70 per mill, would eliminate the use of the Bryan Center for community and youth activities but would continue all other services and capital projects; Scenario C, a tax hike of $7.50, would eliminate the Bryan Center programs and the pool; Scenario D, a tax hike of $7.07 per mill, would eliminate the Bryan Center, the pool and the library; Scenario E, a hike of $6.45 per mill, would eliminate the Bryan Center, pool, library and the economic development program but would still include street capital projects; Scenario F, a tax hike of $1.21 per mill, would eliminate all non-mandated services and vehicle replacements; and Scenario G, which would include no property tax hike, would eliminate all non-mandated services, new street capital projects and reduced parks mowing.

At the meeting, Swansen suggested that the Village should put the property tax increase on the November ballot as a single levy, which would have a term of five years. Council members also considered the possibility of putting on the ballot a variety of measures linked to specific programs, such as the Bryan Center and the pool, which had been suggested in a written memo to Council by Bruce Rickenbach. However, during the meeting Rickenbach and others said they favored the single levy.

“I think a general levy makes sense,” Karen Wintrow said. “I don’t like the idea of putting different wants against each other.”

• In other Council business, Council members unanimously approved a first reading of an ordinance that approved supplemental appropriations through June 30. Council also approved a resolution that approved the 2007 tax budget.

• Council approved new appointees to various Village commissions and committees. Monica Hasek was approved to join the Design Advisory Committee, Paul Abendroth was approved for the Cable Advisory Panel, and Ron Schmidt, Ron Lewis, Jerry Sutton, Sheila Miller and Kent Bristol were appointed to the Charter Review Committee.

• In a report on the Economic Development Revolving Loan Fund, Swansen said that the Village is seeking payment from Euphorbia, which owes the Village $18,641.39 from a loan of $30,000. Swansen reported that the Gypsy Cafe has been making payments on its unpaid balance of $28,860.94, from a loan of $50,000.

Contact: dchiddister@ysnews.com