Hamilton officials are considering boosting income taxes for its residents who work outside city boundaries.
The added revenues, an estimated $1.5 million per year, are needed for two reasons, City Manager Joshua Smith told this news outlet: About half will go toward street improvements, with the rest to public safety equipment and operating expenses.
Hamilton has an income tax rate of 2 percent, but since at least 1995 the city has granted a 100 percent credit for income taxes that are paid in the cities where they work. Under the proposed change, that credit would drop to 50 percent.
If Hamilton City Council approves the change, it is to take effect Jan. 1.
Hamilton residents who work in the city would see no increase in their taxes. Also not affected would be people who don’t earn wages, including retirees, Smith wrote in a report to city council.
Here are examples of how the change in credits for residents would affect residents, as provided by city officials:
- A Hamilton resident who earns $50,000 per year and works in Fairfield (which has a 1.5 percent income-tax rate) now pays $250 a year to Hamilton. That person would pay $625 next year, an increase of $375.
- Hamilton residents earning $50,000 who work in areas that don't charge income taxes (some cities and townships) already pay Hamilton's 2.0 percent income tax rate, and would continue to do so. So their $1,000-per-year in taxes would not increase.
- A Hamilton resident earning $50,000 per year who works in Middletown, where the rate is 1.75 percent, now pays $125. That would jump by $437.50 to $562.50.
- A Hamilton resident who works in Cincinnati (2.1 percent tax rate), Oxford (2.0 rate) or the Hamilton/Indian Springs Joint Economic Development District now pays nothing to Hamilton but would pay $500 a year starting in 2019.
Smith said the proposed income tax change would not alleviate the need for a street repair levy that the city is considering, because, “the city needs over $100 million to bring streets up to a good condition.”
At first, the roads portion of the money would be used to upgrade roadways needed for the proposed Spooky Nook at Champion Mill, a gigantic indoor sports and fitness facility on North B Street that is expected to transform the city into a major sports destination, Smith told council in his report.
“This includes the relocation of B Street, and the installation of a roundabout at the relocated B Street and Rhea Avenue. Once the debt is paid for the Spooky Nook road project, future revenues will be leveraged to improve roads rated with the highest priority,” he wrote.
Smith in a report to council blamed cuts in state funding to cities. A group of funds the state used to send to Hamilton averaged just over $4 million from from 2008-2010. This year, they will represent only $915,000 in payments to the city.
“The city has thus far managed to succeed with far less funding than would have otherwise been available, but to continue to afford to pay for necessary operations and capital improvements, additional sources of revenue must be made available,” he wrote.
Among capital needs for public safety are new police and fire radios ($800,000; four new or rebuilt fire engines that are at least 15 years old ($2.5 million); self-contained breathing apparatuses for firefighters ($450,000); two fire stations built before 1920 that need improvements (Station 26 in Lindenwald and Station 24 on Main Street), with a need for at least one new station; and a new justice center that combines the police station with municipal court.