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Thursday, November 08, 2007

Surprise!!! After Sales Tax Defeat, Hamilton County Studies New Sales Tax Hike

CINCINNATI (TDB) -- This newest plan calls for temporarily bumping the 6.5% Hamilton County county sales tax to 6.75% next year to bring in about $33 million. County Administrator Patrick Thompson floated the idea of another sales tax hike in a (pdf) financial report prepared within hours of a half-cent sales tax increase being defeated Tuesday at the polls. Thompson's recommendation is on page 11 of the pdf document, and states that legal staff "would be requested to develop appropriate resolutions to notice the intent of the Commission to increase the county sale tax rate one quarter of one percent for a one year period."

Voters rejected, 56% to 44%, a sales tax hike that would have raised about $750 million over 15 years to build and operate a new 1,600 bed jail and fund a variety of public safety and law enforcement programs. While that project was scuttled at the polls, the idea of some kind of tax increase seems to remain alive.

So far, there is no action on the proposal the county administrator has placed on the table. The $33 million generated would help cover property tax relief approved by voters when they funded the football and baseball stadiums in downtown Cincinnati. It would also put cash in the general fund. Thompson reported:

"To maintain the history of providing PTR, the Commission could consider using a temporary one-quarter percent increase in the county sales tax (from 6.5% to 6.75%) for a period of one year to reimburse the 2008 PTR and grow the general fund reserve. Each quarter percent increase in the county sales tax rate generates approximately $33 million annually. The amount approximates the total amount recommended from the PTR from 2008 through 2010 described earlier ($14.7 million in 2008, $10 million in 2009, $10 million in 2010).

"Using an increase in the sales tax to grow the general fund balance is not without precedent. During a two-year period between 2005 and 2007, Franklin County (Columbus) increased its sales tax rate from 6.5% to 7% to bolster its general fund balance and maintain its AAA bond rating. After the two-year period, the 7% was reduced to a permanent sales tax rate of 6.75%. The current Hamilton County sales tax rate is 6/5%."

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