City Council approves gradual cuts to income tax credit through 2011

LORAIN — City Council approved reducing the city’s income tax credit Monday night, but not before tweaking the numbers a little bit.

Mayor Tony Krasienko’s investment plan had originally called to reduce the city’s 2 percent income tax credit to 1 percent for residents who work elsewhere.

But a last minute proposal by Councilman Dan Given, D-at large, will instead reduce the credit slowly over three years to the planned 1 percent — allowing, Given said, more time for the economy to improve and for residents to get their finances in order.

“I really started to look at the community and the pain they were going through,” Given said after the meeting. “I had to try and find a compromise.”

Beginning in 2009, the income tax credit will be reduced to 1.5 percent. In 2010, the credit will be cut to 1.25 percent. The final reduction to 1 percent would occur in 2011.

The initial plan to chop 1 percentage point off the credit immediately would’ve given Lorain an additional $3 million in 2009 and enough extra funds to lift the city out of a seven-year budget deficit and be nearly $1 million in the black by 2010.

The amended ordinance gets the city in the black by 2013.

“It does stretch out the ultimate goal,” Krasienko said during the meeting. “But as long as Council is on board with that, I wouldn’t be opposed to it.”

Council approved the amendment and voted 10-1 in favor of the ordinance.

Councilwoman Melanie Szabo, I-1st Ward, was the lone opponent. She said the timing just wasn’t right.

“Honestly, I think people just don’t have the money right now,” she said after the meeting.

If Council would’ve chosen to do nothing, the city’s deficit would’ve been more than $3 million by 2012.

Krasienko said the city would then be forced to shut down several city departments and drastically scale back police and fire protection.

Law Director Mark Provenza said the ordinance had to be approved by this week in order for it to make it to the ballot by 2009 because the city has to allow time for voters to put it to referendum.

Andrew Winemiller, who was briefly Lorain’s safety-service director, is working to take the city’s previously approved $20 license plate tax to referendum. He said his group will turn in more than enough signatures Thursday to do so.

Winemiller said he will immediately begin focusing its efforts on the income tax credit reduction.

“This is burdensome enough that the people need the opportunity to vote on it,” Winemiller said.

Contact Stephen Szucs at 329-7129 or sszucs@chroniclet.com.

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