Special Election Preview: Springdale Earnings Tax Increase

In January, City Council voted unanimously to place on the May ballot a proposed earnings tax increase from 1.5% to 2%. It’s important residents understand the reason this was placed on the ballot as well as who the proposed increase would affect and what this would mean for our City’s future. 

Why is the City in this situation? 

For over 30 years, the State of Ohio shared the revenues from sales tax and state income taxes with local governments, but in 2012 the State began reducing this amount. Springdale experienced a decrease in these tax revenues from $581,000 per year to $195,631 in 2018. The City also lost revenue from the estate tax in 2014 when the State eliminated it resulting in an additional loss of $790,000 per year. On top of these losses, another $284,000 vanished from the City’s revenues when the State phased out the tangible personal property tax. To add further insult to injury, several large businesses have petitioned the Hamilton County Auditor to reduce the value of their properties which has cost the City an additional $360,000 per year. 

In total, these revenue-reducing measures have resulted in a loss of approximately $1.6 million per year to Springdale. The last earnings tax increase for Springdale was in 2004. 

However… 

The City continues to provide the same services to residents with less money resulting in expenses exceeding revenues by approximately $1.4 million in 2017 and 2018. 

If approved, who will the earnings tax increase affect? 

Because the majority of Springdale residents work outside the City limits, the earnings tax increase will affect only approximately 7% of Springdale residents since Springdale gives its residents a 100% credit for taxes they pay to other communities. As a result, nearly all of the earnings taxes are paid by individuals who work here and businesses located here. 

Also, if the measure is approved, pensions, social security benefits, annuities, interest income, dividends, alimony, military pay, capital gains, worker’s compensation, unemployment benefits, insurance benefits, IRA and 401k distributions, welfare payments, and profit sharing will continue to be exempt from the earnings tax. 

How does Springdale’s earnings tax stack up to other communities’ earning tax? 

There are thirty-two communities in Hamilton County that have an earnings tax. When factoring in the earnings tax rate and the full credit given, we find that twenty of these communities have an earnings tax rate equal to, or higher, than Springdale’s proposed 2% rate.

Please remember to vote on May 7th.