City Council, with some input from about 20 citizens, came up with a number of ways to raise revenues or reduce expenditures to help meet a $1 million shortfall.
Much of the discussion at Monday's three-hour budget workshop focused on possible tax increases, but selling and leasing assets, closing facilities, increasing fees, and other possibilities came up. "We're talking about rethinking expenses as well as taxes and revenue gathering in addition to taxes," Council member Dr. Howard Ferguson said.
Among the possibilities were raising property taxes and raising the earned income tax (EIT).
Council had to set a limit for maximum tax increases for next year in advance of the public budget hearing set for 5 p.m. Dec. 10.
After several unsuccessful attempts, council approved maximums of 5 new mills of property taxes and 0.3 percent of earned income.
Mayor Mark Phillips stressed that council has not proposed any tax increase. The motion set the maximum increases. "We're not proposing a five mill (property tax) increase and a 0.3 percent (EIT) increase," he said.
City Manager Nancy Freenock recommended the property tax increase to help make up for the projected shortfall. The millage increase would bring the city's property tax rate from 16.8 to 21.8. One mill represents $1 of taxes per $1,000 of assessed value. In Warren, the assessed value of a property is half its market value.
The current EIT rate in the city is 2.2 percent. The maximum increase would take that number to 2.5 percent.
According to Freenock, anticipated revenues for 2013 are about $6.7 million and anticipated expenditures are $7.7 million.
Council member Sam Harvey proposed increasing the property tax by 5 mills and reducing the EIT rate by .3 percent to 1.9 percent.
"What I'm proposing is a tax decrease and a tax increase," Harvey said.
He said the changes would raise property taxes on the average home by about $125 and decrease income taxes on the median family income by about $156. "You're taking the burden off of working families," he said.
The city would gain revenue because many high-value properties are not homes. He said 40 percent of the properties in the city that are not residential.
The EIT was 1.9 percent in 1989, he said. "Millage should increase with inflation. EIT shouldn't,"
Harvey's motions that council set an increase cap of 5 mills in property taxes and zero percent or 0.1 percent in EIT failed.
Council approved the cap at 5 mills and 0.3 percent with John Lewis, Ferguson, Jim Zavinski, and Maury Cashman voting in favor and Harvey, Chris Park, and Phillips against.
Lewis said the approved cap of 5 mills and 0.3 percent "gives us the greatest amount of latitude."
Council scheduled a public hearing on the budget for 5 p.m. Monday, Dec. 10, with a special meeting of council to follow.
The city has until the end of the year to finalize its budget.