News Column

Oakwood looking to reduce income tax credit

February 6, 2014

By Steven Matthews, Dayton Daily News, Ohio

Feb. 06 -- OAKWOOD -- The city of Oakwood is in the process of reducing its income tax credit to 1.75 percent -- a move that is projected to generate $900,000 annually in new revenue. Oakwood -- which has a 2.5 percent income tax rate -- currently offers full credit to its residents who work outside the city. The first reading of the ordinance was at Monday night's City Council meeting. The second reading is scheduled for March 3 . Council could choose to vote on the ordinance then, or table it for further discussion and vote later in the year, City Manager Norbert Klopsch said. If it is approved, the tax credit reduction would take effect Jan. 1, 2015 , and the additional tax would be due April 15, 2016 . City officials said reducing the tax credit is the final step the city will take to recover the approximately $3 million per year it lost in state funding, most notably the estate tax. Oakwood received an average of $2.6 million a year from the estate tax during a 10-year period before it was repealed. "If this is implemented, and two years from now the money comes in, it will have solved our financial problem," Klopsch said. "We will be in good shape going forward." State law allows cities to impose a tax on income earned in their respective city. Cities also have the right to grant an income tax credit to residents who work outside of the city in which they live. The question of whether to reduce the income tax credit does not need voter approval. City councils can vote to reduce the credit. Oakwood has a 2.5 percent income tax rate. If approved, the 1.75 percent credit would only impact Oakwood residents with income earned in another municipality where the tax rate is above 1.75 percent. For example, Oakwood residents who work in Dayton or Kettering -- which both have a 2.25 percent tax rate -- would also pay 3/4 percent to Oakwood , compared to what they currently pay ( 1/4 percent). Oakwood Mayor Bill Duncan said more than half of the city's working residents earn income in another municipality. "This is primarily to protect our revenue base because we have no control over other cities increasing their rates," Duncan said. The $900,000 in new revenue would be used for general operations, including public safety, roadway maintenance, city parks and capital improvements. The city has a $12 million annual budget. Oakwood collects $6.2 million annually in income tax, and 80 percent of the adults in the city earn income. Earlier steps to generate new annual revenue included: raising the monthly refuse charge from $12.50 to $25 ( $550,000 ); establishing a monthly $6 stormwater utility fee ( $260,000 ); and voters approving a 3.75-mill property tax levy in May 2013 ( $1.07 million ). "While nobody likes to pay more taxes and fees, the citizens appreciate this community," Klopsch said. In Oakwood , the estimated median household income is $94,731 and the mean household income is $129,553 , according to U.S. Census Bureau data. Oakwood has a population of 9,200. -- ___ (c)2014 the Dayton Daily News (Dayton, Ohio) Visit the Dayton Daily News (Dayton, Ohio) at www.daytondailynews.com Distributed by MCT Information Services


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Source: Dayton Daily News (OH)


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