Fostoria city council OKs tax increases

Dec. 07--FOSTORIA -- City Council chose an "all of the above" approach Tuesday to the city's financial recovery, approving a plan that calls for increased property and income taxes.

And starting in January, residents who work outside Fostoria won't be credited for paying income tax elsewhere, meaning they'll pay the tax to the city where they work and the one where they live.

The plan would have the city place a quarter percent income tax and a 6-mill property tax on the ballot, and was one of three options considered by council last week. The plan excluded the elimination of reciprocity -- part of an original proposal -- but council chose instead to phase out reciprocity.

Councilman Jonathan Hay spoke out against the move, as the recovery plan put forward at last week's meeting only include the ballot proposals.

"Now we are saying we are going to do this and reciprocity," he said.

What was approved was something of a compromise. Instead of eliminating reciprocity on Jan. 1, it would be reduced 50 percent in 2017, and then eliminated in 2018.

Councilman Brian Shaver, who supported the reciprocity vote, said the city needed to act now to reduce its budget deficits.

"All that reciprocity does is ask every citizen of Fostoria that lives here to pay the same amount of tax," he said.

A financial recovery plan needed to be approved because the city was placed in fiscal emergency in May by State Auditor Dave Yost. Budget figures earlier this year showed the city projecting a deficit of more than $500,000 in fiscal year 2016, and a 2017 budget deficit of more than $1 million. The city's general fund has decreased significantly in the last eight years.

The fiscal emergency designation means a financial planning and supervision commission now oversees the city. It includes representatives of the state treasurer's office, the Office of Budget and Management, the mayor and city council president, and three members appointed by the governor.

The five-year recovery plan, even without the reciprocity phase-out, would have eliminated budget deficits within three years, Mayor Eric Keckler said.

If approved by voters, the income tax increase would raise about $700,000 annually for the city, while the property tax would raise about $890,000. The property tax levy would mean a taxpayer with a $100,000 home would on average pay $210 more a year if approved.

The 50 percent reduction in reciprocity would give the city an extra $250,000 in revenue next year, Mr. Keckler.

The recovery plan can be changed, and Mr. Keckler said he didn't consider the path chosen by council Tuesday as "ideal," as eliminating reciprocity while raising taxes would be hard for residents to swallow.

"In the grand scheme of things, this isn't my favorite plan," he said. "I'm really hoping some better ideas come up moving forward."

Contact Nolan Rosenkrans at: nrosenkrans@theblade.com or 419-724-6086, or on Twitter @NolanRosenkrans.

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