In 1969, a local ordinance was enacted to require that 50% of all income tax collections be used for capital improvement projects. Leaders recognized the significant cost of building and maintaining an infrastructure for a growing city. By 20 years later, our economic strength had deteriorated, as was the situation with many Midwestern industrial towns.
In 1986, City Commission (now “Council”) wrestled with how to deal with the increased cost of local government, while revenues stagnated. Less assistance came from Columbus or Washington. One “solution” was to repeal the 50% capital improvement requirement to allow more flexibility on where to allocate dollars. On February 18, 1986, Commissioners voted to put the question before residents as a ballot question:
“[I]n order for the City to have operating funds sufficient for 1987 and 1988 we would have to have additional operating revenues. This year we are making painful cuts -- program cuts, lay-offs, City service reductions and cutting our surpluses. The next cuts will be in mainstream services. The only other alternatives are to raise taxes or charge for services. General Revenue Sharing and other federal funded programs are dwindling even more and sooner than anticipated. Removal of the tax formula will make available $1 to $2 million for City operations.”
In May 1986, voters approved the repeal of the ordinance. Little has changed in 34 years: budgets remain tight, and there’s often less help coming from the State or the Federal governments. According to the CPI Inflation calculator, $2 million in 1987 has the same buying power of about $4.7 million today. If Middletown had spent $4.7 million per year on capital improvements (including paving) every year for the past 34 years, (totaling about $160 million), then we would not be having this discussion. A 2015 estimate to bring all roads to excellent or good condition was $162 million. The numbers make sense: the reallocation of funding from capital set us on this course. But, we must recognize the political and management realities of both then and now: it’s much easier to forgo paving a road than it is to lay off staff. It’s much more popular to give wage increases than to deny a wage increase. It’s much easier to delay capital projects than it is to ask residents for a tax increase.
So where do we go from here? Voters have the opportunity to approve a City Charter amendment that would add 0.25% to our income tax rate. These additional funds would be helpful in substantially accelerating the rate of repaving. If approved, there are safeguards in place to make sure that the funds are used exclusively for road resurfacing:
- The City will issue bonds, to borrow against future tax collections.
- The proceeds from the sale of the bonds will yield $30+ million for use in the years 2021 and 2022, so that the paving effort will have immediate impact.
- Neither future Councils nor Staff could redirect those funds for other uses. Rather, the taxes collected must be used to repay the bonds.
- The charter amendment expires after ten years—voters will hold the City accountable for results.
I respect this citizen-led effort, and as a member of Council I am not taking a public position on the levy. I am happy to allow residents to weigh in on this important topic through the democratic process, and to let us know if road repaving is a priority worthy of their additional investment.
Joe Mulligan is the vice mayor of the city of Middletown