Johnstown voters consider income tax increase to pay for variety of city services
JOHNSTOWN − Voters in Licking County's newest city will decide in the upcoming election whether to increase income taxes on workers in Johnstown from 1% to 2.25% to pay for a variety of services.
If approved, the money would be used for public safety, economic development, operations efficiencies and capital improvement. A tax credit of 75% would be provided for residents who pay income taxes to other municipalities.
The city currently collects about $3.2 million annually from its income tax. The additional tax, the first increase in more than 40 years, would provide an estimated $1.5 million.
Johnstown became the fourth city located entirely in Licking County, joining Newark, Pataskala and Heath, after the U.S. Census revealed Johnstown passed the threshold of 5,000 residents, forcing the change, effective Oct. 21, 2021. Johnstown, which had 3,440 residents in 2000, reached 5,182 according to the 2020 census.
Some of the changes that come with being a city are collective bargaining with unions and responsibility for maintenance of U.S. 62 and Ohio 37 in the village.
The city spends about 33% of its general fund on its police department and 33% to pay of its debt, Mayor Donald Barnard said. That leaves 33% to run the rest of the city, except for the water and sewer department, which has its own funds.
City Manager Sean Staneart said, “Over the last year we’ve had continued requests from residents for additional services and improved infrastructure. It is understood by council and staff in order to facilitate these requests additional revenue would be required.
“We will continue to do the improvements we can with the resources we have. It should be noted that many streets which were originally put in by developers over the last 20-plus years are starting to show signs of wear. Without increased revenue it will be increasingly difficult to keep up with the aging infrastructure.”
The city did no street projects in 2023 except for Jersey Street, which was continued from 2022.
Some Johnstown roads need to be completely replaced, not just resurfaced. The longer the wait for additional funds, the more streets will be added to the costlier replacement list.
“Without the income tax adjustment that we are proposing, Johnstown will continue to tread water and not be able to improve roads, security, planning and protect our borders from annexation from other municipalities,” Barnard said.
Some Johnstown residents could ultimately get a tax cut, depending on where they work
The income tax collects only from those working in the city. Residents who work outside the city will receive a 75% tax credit toward taxes they pay in Columbus or other municipality. So, for some, the tax levy will become a tax cut.
City council included the tax credit on the ballot, so only voters can rescind it. In 2015, council rescinded a 50% tax credit. Council would not be able to do that again.
"The city wanted to be mindful of the financial impacts this would have on its current residents," Staneart said. "By instituting a 75% credit a majority of the residents would receive a tax savings or realize no tax change, while simultaneously providing increased revenue for the city.
"Moving to a 2.25% rate while incorporating a credit enables the city to collect a larger share of its revenue from the businesses and labor force located in Johnstown."
As the region grows, more businesses are expected to come into the city, adding to the tax revenue. Many of those taxpayers may not be Johnstown residents.
"Without passage, it will continue to put the burden of the city’s finances on the back of our residents and not on the businesses that want to call Johnstown home," Barnard said. "It is imperative that the tax levy passes if we want to have the ability to pass on a city to our children."
The tax is on earned income, so most retirees would not pay additional taxes, unless they file a W2 form, Barnard said. Social security income and retirement income will not be taxed.
"This income tax effects all residents differently, some residents would see an increase, some no change and others would see a decrease in taxes," Staneart said.
Staneart explained why the city chose an income tax instead of a property tax.
"An income tax, with a credit, generates a large share of its revenue from the workforce inside the city," Staneart said. "A property tax would rely heavily on the residents and less on the workforce population. Property taxes are typically used for specific projects or services and oftentimes temporary in nature, requiring a renewal after an extended period of time."
City officials have not said what would be cut if the levy fails, but the impact could be widespread.
"All operations outside of water and sewer would feel the impact with a defeat," Staneart said.
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This article originally appeared on Newark Advocate: Johnstown voters consider income tax increase to pay for city services
