12-06-2021 11:37pm

Full Income Tax Credit Could Be a Thing of the Past in Carlisle

Beth Callahan Editor

Carlisle, OH -- Paying two income taxes could happen to some Carlisle residents next year. Carlisle Council members are scheduled to make a decision about amending the city’s current tax code at tonight’s regular meeting (Tues., Dec., 7, 2021).

Currently, residents who pay 1.5 percent or higher in income tax to the city where they work are given the full 1.5 percent tax credit from Carlisle… meaning they do not pay any income tax to Carlisle.

If council votes to amend the code after the third reading this evening, the change will allow an income tax credit not to exceed 0.5 percent. This means even though a resident may be paying an income tax to the city where they work, they will still be responsible to pay Carlisle, the city where they live, at least 1 percent.

This tax change will not affect residents who live and work in Carlisle, or who work in townships, or others who are on a fixed income such as Social Security. The only residents this will impact are the residents who live in Carlisle and work outside of Carlisle in another city, which according to Carlisle’s Finance Director Ryan Rushing is anywhere between 60 to 70 percent.

If passed, the change would go into effect for the 2022 tax year, which then would be part of the 2023 tax returns.

Since 2019, Rushing has been reporting to council that the municipality’s services are continuing to increase, and the city needs to find away to pay for these services.

According to Rushing, the Police Fund is one of these services that continues to increase in cost without any increase in its funds. It will go below the minimum 20 percent fund balance by 2023, and by 2026 the Police Fund will be in the negative due to a $500,000 deficit.

Currently, the $400,000 needed to fund the Police Fund shortage is coming from the General Fund, and this shortage is growing year after year. It is also the largest budgeted item in Carlisle’s General Fund.

Rushing explained that in government accounting, the city can only use money in the fund for which the fund was legally created, meaning that even if the sewer fund has a surplus in its account, it cannot be used for the police fund that may be in a deficit. It's only in the General Fund where money can be moved around.

The General fund money is generated from the 1 percent permanent income tax enacted back in 1989, which generates close to 1 million dollars, and the property tax that the county collects and allocates, which according to Rushing has been around $75,000 the last few years.

In 1994 the residents did vote for a 0.5 percent income tax for police services. But the revenue brought in from this each year is not enough to sustain the type of police services that both the council and the community wants, which is two officers on duty at all times.

Carlisle’s attempt to pass an additional 0.5 percent income tax increase for police service failed twice; once in 2014, then again in 2015.

Despite Carlisle’s growth, the General Fund has not been growing since most of the growth has been in the four areas that have TIFs (Tax Increment Financing). Real estate taxes collected from these properties do not go to the city, they are put into a TIF.

Rushing explained that TIF's funds can only be used for infrastructure in the TIF's district. It cannot be used for municipal services such as police.

The ability for Carlisle to obtain sufficient revenues from property tax levies is eliminated since the city does not get property tax from property’s inside TIF’s.

While the city would love to see more businesses move in, Rushing explained a business would need to generate $15 million in payroll to generate the approximate $225,000, that is needed to pay for one patrol car and one officer for one year.

The majority of the land for growth in Carlisle is for residential growth. The city does not have that much vacant land to generate the amount of payroll needed to gap the $500,000 deficit, he said.

Rushing noted that Carlisle would not be the only city in Warren County that does not give full tax credit. Lebanon, Springboro, Maineville and Morrow are just a few of the city’s that don’t give their residents full income tax credit.

It is the residents that live in Carlisle that use the city’s services but are not paying towards their home services that we are trying to capture, Rushing said.