A tax increase proposal in midst of a recession?

The story would have stuck out like a sore thumb even without the headline, “Lowellville mayor: Tax increase needed.” Our immediate reaction upon reading the comments of village Mayor Jim Iudiciani was, “Is this for real?”

Raising taxes in the middle of an economic recession that has triggered a 10 percent national unemployment rate — it is even higher in the Mahoning Valley — seems so out of touch with reality that it warrants comment. It doesn’t matter that the community is one of the smallest in the region.

We aren’t questioning the mayor’s sincerity in wanting to do what’s best for Lowellville, nor are we challenging the need for additional revenue. Just about every county, city, township and village government in the Mahoning Valley is struggling to balance its operating budget as a result of declining tax revenues.

Thus, recent headlines in The Vindicator: “Boardman police pact cuts starting wage, raise hopes”; “Police union OKs lower starting salary” (in Youngstown); “Council rescinds raises for workers” (in Lordstown).

And there was the highly publicized decision by Warren Mayor Michael O’Brien to give back a portion of his salary and to pay 10 percent of the premium for his government-provided health insurance.

In other words, cuts in spending through employee wage freezes and concessions are becoming the order of the day.

So, what makes Lowellville different?

According to Mayor Iudiciani, the village’s 1.5 percent income tax has been in place for 34 years and today revenues are flat. In addition, state funding has decreased.

Budget carryover

He and other officials are proposing a half-percent increase to generate funds that would provide a carryover in the budget which government uses to match state grants for road, sidewalk, curb and paving projects.

Because of the current budget pressures, the mayor said there may not be any additional money at the end of this year. That is why he believes the 0.5 percent income tax increase is necessary. In 2009, the 1.5 percent tax brought in $318,000. The proposed 2 percent rate would generate $400,000.

But there are certain realities village officials are no doubt aware of with regard to the community: First, the population as of July 2008, according to city-data.com, was 1,146, a 10.5 percent decline since the 2000 national population census figures were released; the estimated median household income two years ago was $33,656, up from $29,565 in 2000. However, the median in Ohio was $47,988.

Yet, with this downward trend in population — this year’s national census is expected to show the Mahoning Valley with one of the largest population losses in the state — Lowellville officials believe residents would approve a tax increase because services have not been cut, even with revenues being flat. At the same time, the village’s fixed costs keep rising.

The mayor is also quick to point out that the five full-time employees have not had a pay raise in several years.

However, given the reality of the private sector workplace, the wage freeze for village employees will not be persuasive. Indeed, it is always risky for officeholders to talk about compensation because the benefit package, including top-of-the-line health care coverage and a lucrative pension with health care, for public employees has become a point of contention for taxpayers.

It may well be that the residents of Lowellville will be persuaded to increase the income tax rate, but the mayor and village council should have a fallback position because the economy is not going to improve any time soon and the state’s economic picture will not brighten in the foreseeable future.