Cleveland Heights proposes income tax rate increase

Cleveland Heights City Council is proposing an increase in the city’s income tax rate. If approved by voters in November, the quarter-percentage-point increase would take effect on Jan. 1, 2016. It would be the first rate increase since 1979.

In introducing the proposed increase on first reading at the city council meeting on July 6, Vice Mayor Cheryl Stephens cited cuts in state funding as the cause of the city’s budget woes. She explained that the rate increase from the present 2 percent of income to 2.25 percent would not apply to retirement income. The current half-percentage-point credit for income earned outside of Cleveland Heights would remain in effect.

After Stephens formally introduced the ordinance authorizing the tax hike, Mayor Dennis Wilcox explained why the increase is needed. He reiterated the effect of reductions in state funding of local governments, which have included significant cuts to the Local Government Fund and the elimination of the inheritance tax. Wilcox also acknowledged the financial problems caused by the Great Recession and the foreclosure crisis, neither of which Cleveland Heights has fully recovered from. He explained that about 80 percent of the city’s budget goes toward personnel costs. Forty-four percent of the budget pays for safety forces, and 20 percent is put toward public works.

Wilcox went on to describe how the city has actively worked to cut expenses in recent years, including cutting staff by 16 percent from its peak size—a reduction of about 100 full-time employees. Programs have been reduced or eliminated, employee health care has been restructured, and regional solutions have been sought where possible. Cleveland Heights joined the Regional Income Tax Agency a few years ago, participates in a regional dispatch system, and is now providing waste-hauling services to University Heights and Case Western Reserve University. Wilcox noted that the city has held off in seeking an income tax increase, while neighboring Shaker Heights and nearby Lyndhurst have recently increased their municipal income-tax rates.

“It is about more than just what will happen to services [if the rate increase is not passed],” the mayor stated. “It is about investing in our future, about understanding that maintaining our services is critical to attracting new residents and families and keeping Cleveland Heights one of the best places in our region to raise families.”

Wilcox asserted that there would be a communitywide discussion and process around the proposed tax increase, which will include the appointment of an advisory panel made up of citizens experienced in finance and management. One of the panel's tasks will be to review the revenue projections on which the proposed rate increase is based. He made assurances that city taxpayers would have ample opportunities to have their questions answered and express their concerns.

A video of the July 6 meeting of the Cleveland Heights City Council is viewable in its entirety at www.youtube.com/user/clevelandheightsoh.