TAX NEWS - JUNE 2010

Tax vote could be 'catastrophic', Lorain City Council members say in letter

LORAIN — A ballot issue in the works that would rescind Lorain's income tax credit reduction could bring "catastrophic" consequences to the city, Lorain City Council warned.

Council voted in December to reduce the city's income tax credit from 2 percent to 1 percent for Lorain residents who work and pay income tax elsewhere. That change means those residents now owe Lorain 1 percent of their income.

However, a petition drive has been started to let voters decide whether or not the income tax credit reduction should remain.

Ten of the 12 council members have signed a letter warning of dire consequences if the city returns to the 2 percent tax credit allowance, stating if that happens, it would gut municipal services and spur an exodus of businesses from the city.

Lorain would need to eliminate the street department, all park maintenance, the cemetery and engineering departments, and cut at least eight more jobs from the police and fire departments, according to the letter signed by the council members.

"If this tax-credit reduction were to be rescinded, the consequences to Lorain would be catastrophic," and would result in cutting $1.5 million from the city budget, according to the letter written by Councilman Brian Gates with input from other council members attending the city's Memorial Day Parade. It was signed by Gates, council President Joel Arredondo, at large members Dan Given and Mitchell Fallis and ward council members Andy Drwal, Tim Howard, Bret Schuster, Richard Lucente, Miroslaw Silecky and Craig Snodgrass.

Council members Eddie Edwards and Anne Molnar did not sign the letter.

Molnar said she didn't sign it because residents should have the right to vote on the issue, but agrees with the other council members that if the tax credit reduction is rescinded, city services will be cut.

"Let them put it on the ballot," Molnar said. "I think it's a good idea. That's taxation with representation, that's giving a public a chance to say 'Yes, we do want it' or 'No, we do not want it.'" If the reduction is rescinded, "I just want the public to know and remember they will be down even more services, because we are in dire need," Molnar said.

Edwards could not be reached for comment.

Gates said he didn't want to wait until the Monday council meeting to begin discussing the issue.

"I thought it was important to let our view be known sooner rather than later," Gates said. "I think it's important enough and obviously it would have a big enough impact on the city that I wanted to get our views out there as soon as we could."

One of the organizers to rescind the petition, former city law director Michael Scherach, has said what the city needs to do is attract new jobs that would generate more income tax money.

"What he fails to mention is that if these cuts are implemented in response to his initiative, there is no business anywhere in the country that would be willing to relocate to Lorain, and, in fact, the opposite would happen," the letter stated.

"The consequences of this petition drive and initiative would result in a crisis that should frighten everyone in Lorain, regardless of political party affiliations. We hope the residents of the city would join (council) in opposing this attempt to cause such destruction to the city that most of us living here still love," the letter goes on to say.