The History behind the Proposal Westerville s income tax

							The History behind the Proposal
Westerville’s income tax revenues account for nearly 60% of the City’s revenue stream, but according to
our City leaders and the Finance Director the current income tax structure does not provide enough
revenues to maintain our infrastructure and to provide the level of city services that Westerville residents
have come to expect. For example, we know an extra $4 million annual investment is necessary just to
update all of the City’s roads currently rated as’ poor or fair’ to a fair or good condition. This additional
investment is not possible today because the City’s 1.0% income tax rate for general services has not
increased for 25 years, since 1983. (In 1998, voters approved “PROS 2000,” an additional 0.25% income
tax devoted specifically for recreation and parks needs. ) And, under the current City of Westerville
income tax structure, every resident does not pay the same rate of income tax.

How the Proposed Tax Increase Would Work
Westerville Residents who are retired or who are on fixed incomes would not be impacted at all
financially by this plan. If approved, all Social Security, company pensions, dividends & interest income
would continue to be exempt from the City’s income tax.

Westerville residents who work outside Westerville (approximately two out of every three working
residents are in this category) and who currently pay an effective income tax rate of 2.3% would see a net
tax rate decrease. Here’s why: A Westerville resident who works in Columbus or a community with a
2.0% income tax rate must pay that community 2.0%--of which Westerville receives nothing- and then
pay Westerville an additional 0.30%. So, their total current effective income tax rate is 2.3%, one of the
highest in central Ohio. Under the proposed plan to change Westerville’s income tax rate to 2.0%,
Westerville residents who work elsewhere would receive a full 100% credit on the taxes paid to the
communities where they work. So they would see a net tax rate decrease from 2.30% to 2.0%, saving
$3.00 annually for every $1,000 earned.

Westerville residents who work in Westerville (approximately one out of every three working residents
is in this category) currently pay 1.25%, which is our City’s current income tax rate. Under the
proposed plan, these residents would pay the same 2.0% rate as Westerville residents who work
outside Westerville (in a 2% taxing district), which would mean an additional $7.50 per $1,000
earned income.

Non-Westerville residents who work here now pay 1.25%, our City’s current income tax rate. Most
also pay 0.75% to their home community for a total of 2.0% paid in local income taxes because the
predominant central Ohio rate is 2.0%. With this proposal, these non- residents would not be impacted,
and would continue to pay 2.0%. But their full 2.0% would stay here, resulting in an additional $8 million
for Westerville services and infrastructure projects (these funds are now being used by other communities
to pay for projects outside of Westerville).
To calculate how the proposed income tax restructuring would impact your household: residents
working outside of Westerville in a city with a 2.0% income tax rate (i.e., Columbus, Dublin,
Worthington, New Albany, etc.) would save $3.00 annually for every $1,000 earned; residents who work
in Westerville would pay an additional $7.50 per $1,000 earned.




The Westerville Area Chamber of Commerce Board of Trustees and Government Relations Committee
are currently reviewing this issue for consideration to take a position.