Carlisle Tables Income Tax Credit
Carlisle, OH -- Amending the income tax code that would have required some of its residents the responsibility of paying two separate income taxes to two separate cities was tabled at Carlisle’s Council Meeting Tuesday evening by a vote of 4 to 3.
Tabling the ordinance isn’t going to solve the unique predicament Carlisle finds itself in financially. It’s just giving the current council and administration some extra time to see how to navigate around decisions that were made back in 2005.
Council at that time created four TIF’s (Tax Increment Financing) to help the city bring in more residential housing areas. While Carlisle saw a 12 percent increase from the last census, making it the fastest growing area in Warren County according to Carlisle’s Financial Director Ryan Rushing, most of the growth has been in the areas designated as TIF’s.
Rushing explained that usually with growth, the General Fund and other service funds would grow due to property taxes. However, because of the restrictions that TIF’s have, Carlisle’s General Fund, along with some other service funds, are not experiencing growth, especially the Police Fund, which is currently using $400,000 out of the General Fund to operate.
According to the Warren County’s Auditor’s office, the monies collected from these properties go to the city, but they must go into a separate TIF fund. This collected money can only be used in that TIF District for the building of infrastructure such as, roads, utility lines, sidewalks and sewers. No monies collected from a TIF can be used for services such as police, fire or parks until the TIF expires.
For Carlisle, there TIF’s do no expire until 2035, which doesn’t help solve the deficit it sees its Police Fund being in by 2026.
Along with the growth being mostly in TIF areas, Carlisle is known as a bedroom community, meaning there is less industry and businesses to support its tax base, and most of its residents leave the area for work. Currently, between 60 to 70 percent of Carlisle’s tax paying residents work outside of the city Rushing said. This means the city's they work in are getting a taxed income from them, while the city they live in is not.
These residents are “credited” the city’s full 1.5 percent income tax, if they work in an other city where they pay an income tax that is the same or more than Carlisle’s. An example would be if someone works in Middletown and pays the 2 percent income tax there. They would not be made to pay Carlisle’s 1.5 percent income tax. They are given full credit.
The amendment that Carlisle has temporarily tabled was going to give residents who work outside of the city and pay an income tax elsewhere a 0.5 percent credit, which means the tax payer would also be responsible to pay Carlisle 1 percent of their income.
This change would not effect anyone that lives and works in the Carlisle or anyone on social security, pensions or other types of retirement payments Rushing said.
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, with the Police Fund being his most concern.
The Police Fund continues to increase in cost without any increase in its funds, said Rushing who using his current number trends predicts that the Police Fund will be in the negative due to a $500,000 deficit by 2026.
Currently, the $400,000 needed to support the Police Fund shortage is coming from the General Fund. Along with it already being the largest budgeted item in the General Fund, its shortage continues to grow year after year.
The General Fund money is produced from a 1 percent permanent income tax enacted back in 1989, which generates close to 1 million dollars. Another $75,0000 is allocated to the city from property taxes that are collected by Warren County, Rushing said, adding that an other 0.5 percent income tax for police services was adopted by Carlisle residents in 1994.
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, Rushing said.
Government accounting is much different from household accounting. In a household budget funds can be moved around to pay a car payment from vacation saved money if needed. The city cannot do that.
Money can only be used 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.
Concerned residents came to speak at last night’s meeting agreeing they would rather have something to vote on, such as a police levy, rather than have council members make this type of taxing decision for them.
Rushing re-minded council that the property tax money collected from homes in a TIF if a police levy would pass, would not be allowed to go into any other fund except that TIF's fund. The city cannot use any of that TIF money for police services he said.
Rushing added that Carlisle would not be the first city to give only partial credit for income taxes paid to other city’s by their residents. Out of the 12 municipalities in Warren County's area, six of them no longer give full credit to their tax payers who pay an income tax to the cities where they work.
Voting “yes” to table the third reading of the ordinance during Tuesday night’s meeting were: Tim Humphries, Randy Jewett, Debbie Kemper and Chris Stivers. Voting “no” on tabling the decision on the proposed amendment were: Mayor Randy Winkler, William Bicknell and Kim Bilbrey.
Next Council meeting is Tuesday Dec. 14 at 7pm.