Facing Budget Deficit, Lorain Reconsiders Income Tax Credits

Officials hope the Lorain Palace Theater will be a site of revitalization downtown.
Officials hope the Lorain Palace Theater will be a site of revitalization downtown. (ideastream file image)
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by Nick Castele

Lorain City Council members meet today to talk about solutions for the city’s budget deficit, including changes to income tax collections.

A meeting of the finance committee is scheduled for this evening. The city faces a budget hole of around $3.5 million, council members say.

The city offers an income tax credit to people who live in the city but work elsewhere. That way, residents won’t have to pay municipal taxes in full to two different cities.

Council is now considering cutting that income tax credit in half, bringing in around $2.8 million this year. It would be phased back in over the next two years.

Members of city council blame cuts in state assistance and idling steel mills for the budget shortfall.

“We finished last year with a budget shortfall due to the steel mills basically closing up in Lorain,” Councilman Brian Gates said in a phone interview. “We had a deficit carried over from last year, plus a big drop in revenue.”

Also being considered is a two-week furlough for city employees. There had been talk of instituting a mandatory retirement age of 57 for police and firefighters—but Gates said that idea isn’t on the table right now.

City Council President Joel Arredondo said it was only a few years ago that the city faced a similar challenge.

“We’ve been out of fiscal watch since, I think, 2013,” Arredondo said. “So we don’t want to go back there.”

The city must approve a balanced budget by Thursday, Arredondo said.

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