An Analysis of the Proposed 5.0 Mill Operating Levy on the 3 Feb. Ballot

On 3 February, Xenia citizens will be voting on only one issue. Voters will determine whether to give the city a raise in the sum of $1.86 million a year.

City council agrees with City Manger Jim Percival and Finance Director Mark Bazelak that without this new levy Xenia will not have enough money for daily operations. Daily operations include police and fire protection, ambulatory services, maintenance of parks, sidewalks, streets, and a host of other services.

Like the rest of us, city revenues purchase less gas and just about everything else needed for daily operations. The continuous increases of inflation are a pain to us all. So is a devalued levy to a city budget. The 3.5 mill operating levy passed originally passed 1959 has decreased in value to less than 1 mill (0.92) or $417,000. (see note below) If law permit levies to appreciate based on average inflation, the same levy would now generate over $1 million per year. That is why city officials want Xenia residents to approve the new levy, but is the proposed levy really necessary? Are city officials just hyping up the need just to get more money for raises and pet projects?

If the levy doesn’t pass, city officials claim that they will have to reduce some services and more personnel. Percival said, “city staff and services such as leaf collection and capital and street improvements would likely be cut in early 2010,” according to News-Current reporter Aaron Keith Harris. Percival also thinks some departments are already understaffed because of cuts in 2003.

That is one of the reasons Percival wants more money. He wants to hire more maintenance personnel.
He also wants a new police facility to station more police and a third fire station to house more fire fighting personnel. Having reviewed U.S. Department of Justice statistics on local police departments as well as National Fire Protection Association data on local fire departments, Xenia certainly doesn’t need more staff now. Once the population of Xenia surpasses 28,000, a couple of more police probably would be necessary. Interestingly, cities comparable in size to Xenia have two things Xenia does not: three fire stations and more voluntary fire fighters than paid ones. I suspect paid employees have more incentive to do the best job possible than do volunteers, but then union workers also have a different reputation. Nevertheless, I think Xenia council’s idea to hire more part-time fire fighters is a particularly good one. I think that part-time seasonal employees would be ideal for solving the insufficient number of park maintenance workers pointed out by Percival.

Repairing infrastructure is another issue driving the city officials to seek more revenue. The deteriorating retaining wall and sidewalks at Shawnee Park needs repair. This need alone will cost an estimated $800,000 to repair. There are other structures that do or will require maintenance. City Hall, the service center, and XFD need as well.

But is the city’s financial situation really that dependent on the levy? Xenia residents voted in a 1.5% income tax years ago. In 1991, voters agreed to increase it to 1.75 percent. The income tax not only produces a significant amount of the city’s general operating revenue, about $8.7 million a year, but it also increases with inflationary increases of income. The $8.7 million probably doesn’t include additional tax revenues from the 3,000 new residents and as well as new businesses that Nimfa Simpson revealed to the U.S. Census Bureau. If only one-third pay income and property taxes, Xenia is doing better then previous reported by Bazelak. At least, I didn’t see any mention about the economic effects of the additional population in Bazelak’s or Percival’s reports. Another source of revenue is $1.6 million in other local taxes, which the current operating levy is a part. All other general fund revenues, which include vehicle and gasoline taxes, grants from other governments, and return on investments, amount to $10.4 million. When government program revenues including charges for water, sewer and sanitation as well various operating and capital grants are added, the cities total revenues increases to $28.1 million in 2007. Total expenses were $26.9 million for the same year. Police, fire, and other safety operations account a little over 41 percent ($11.1 million) of all expenses. Water, sewer, sanitation, and related expense account for nearly 32 percent. State law requires the city maintain a $2.5 million reserve fund (10%) for emergencies. That leaves $4.8 million or 17% for all other expenses including payroll, insurance, maintenance, equipment, and so forth.

According to city officials, less state funding and other potential reduction of revenues renders the continuation of a $1 million surplus less likely by 2010. Of course, the federal stimulus might trickle down to our local community. If so, it could make up for a loss of $90,000 in state funds, and it could be used for some capital improvement projects.

Whether or not Xenia sees any federal stimulus dollars, city management still projects a budget deficit by 2010, which means more operating revenues will be needed. To that end, they presented to City Council five funding options:

Option One: They could do nothing, which would decrease annual revenues by $417,000 a year.

Option Two: They could renew the current levy, which would continue generating the same annual amount of revenue it does now– $417,000. According to Percival and Bazelak, renewing the levy would still leave the city with insufficient operating revenue.

Option Three: Council could pursue a 3.5 mill operating replacement levy. A replacement levy would increase revenues by $1.27 million a year. By law, levy renewals only permit a city to tax property for original amount of the original levy. The effective millage of the original 3.5 mill operating levy is locked into the assessed property values of 1959. The effective rate of .92 mills reflects the reduced current purchasing power of the revenue due to inflation, which also explains why a 3.5 mill levy would generate $1.27 million. Since 1959, property values have increased because of land development, improvements, and inflation.

Option Four: They could increase city income tax from 1.75 percent to 2 percent, which would increase operating revenues by $1.443 million. This is the least desirable option for several reasons: One reason is its negative effect on low-income wage earners and their families, and two is its questionable constitutionality. The writers of the U.S. Constitution opposed income tax for good reason: a limited federal government is the best kind.

Option Five: The last option given to the Council for consideration was a 5.0 mill replacement levy. A 5.0 mill levy will give the city a total of $1.86 million a year. That is $1.27 million at 3.5 mills plus $590,000 at 1.5 mills. This is the option City Council chose to place on the February ballot. Notice, $1.86 million is the official figure estimated by the Greene County auditor. This amount will be presented to voters on 3 February.

The County Auditor estimates the average annual amount of tax paid on a property valued at $100,000 is $26.34. If Xenia voters approve the proposed 5.0 mill operating levy, the tax amount for the same property will increase to $153.13 or about $12.50 per month.

The proposed operating levy will only directly affect property owners. The good news is that the income of homeowners has been keeping up with inflation. Census data shows that the median income of Xenia households with mortgages was $44,727 in 2000 and $55,447 in 2007. Their yearly income ahs increased an average of about 3 percent. That is not case for renters, low-income wage earners, and many retirees.

Obviously, property owners have good reason to show up at the polls on 3 February, but so do others. If you hope to one day own your own home in Xenia, your vote will affect your future cost of home ownership. Even if you always intend to rent, your vote will determine whether quality services are maintained or added.

Note: 1 mill is equal to 1/1000 a dollar of assessed property value.

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