Fostoria leaders: Tax hikes may not be necessary

Jan. 06--FOSTORIA -- A city financial recovery plan was rejected Wednesday by a financial planning and supervision commission that oversees Fostoria's finances, with the mayor citing the plan's heavy reliance on tax increases as a major reason for its rejection.

City council in December approved a five-year plan that called for the city to place a quarter-percent income tax and a 6-mill property tax on the ballot. A financial recovery plan needed to be approved because the city was placed in fiscal emergency in May by State Auditor Dave Yost.

But council also approved at that December meeting the phase out of income tax reciprocity -- meaning residents who work outside Fostoria won't be credited for paying income tax elsewhere and will instead pay the tax to the city where they work and the one where they live.

Reciprocity would be reduced 50 percent starting Jan. 1 and eliminated the same date in 2018.

The reciprocity elimination wasn't included in the financial recovery plan, Mayor Eric Keckler said, and city staff have also continued to look for potential cost reductions, meaning the tax increases called for in the plan may not be necessary.

"The objective is to put together a plan that doesn't call for such drastic tax increases," he said.

The 50-percent reduction in reciprocity would give the city an extra $250,000 in revenue next year, money the recovery plan hadn't accounted for this year, Mr. Keckler said.

The financial commission 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 proposed income tax increase -- if approved by voters -- 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.

Quentin Potter, who chairs the commission and represents the Ohio Office of Budget and Management, cited that reciprocity was not factored into the financial recovery plan as a reason for the commission's decision, and said there was a lack of detail about the need to raise utility service rates or how much they would be raised.

He said the plan did not explain how debt financed projects would be repaid, and also cited the heavy focus on revenue increases in the plan.

"There were significant increased revenues proposed (property and income taxes), but fewer suggestions for limiting spending," he said in an emailed statement.

City Council President Steve Kauffman did not return a message Thursday afternoon.

A special council meeting is set for Feb. 16 for councilmen to discuss a new recovery plan. The financial commission is to meet Feb. 22 to vote on the new plan.

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

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Eric Keckler, fostoria, nolan rosenkrans, State Auditor Dave Yost, fiscal emergency

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