GATES MILLS — With an ongoing deficit of $450,000 in the forecast for the village, residents and officials on the tax subcommittee of the Long Range Financial Planning Commission gathered on June 3 to discuss tax alternatives to bring more revenue to the village. The main proposals were taking action with the Mayfield City School District, changing the income tax or introducing a levy.
Gates Mills is part of the Mayfield schools and 59 percent of the residents’ property taxes go to the school district. Many of the children who reside in Gates Mills attend private schools. Tax Administrator Bob Reitman said that if the village sought to be part of a different school district, it depends on whether they could move across County Line Road, which would give them the possibility to attend a district in Geauga County. Gates Mills is in Cuyahoga County. The other options, he said, are the Orange City School District and the Chagrin Falls Exempted Village School District.
“We know that there are compelling economic reasons to find a way to cut the taxes but, having said that, we also have the example of Hunting Valley, which attempted to do an end run around the school board of Orange,” Mr. Reitman said. “Not only did the Orange people get their heads up, but the legislature, once it became visible what they were doing, the legislature turned their back on them.”
In July of 2019, Hunting Valley officials worked with state Sen. Matt Dolan, R-Chagrin Falls, who inserted an amendment to the state budget bill that would have changed the school funding formula to decrease how much Hunting Valley paid to Orange schools by $3 million to $6 million. Gov. Mike DeWine used a line-item veto to kill the amendment.
Mr. Reitman said that the village is obligated to be part of a school district. If village officials were to advise the Mayfield Board of Education on how few students attend the public school but how much money the district receives from Gates Mills’ property taxes, he said that there would surely be pushback from the school district.
“It would be a very serious fight. Mayfield would not give in easily to us,” he said. “I don’t know where we would find the economic strength to fight that fight. We have for years and years and years resisted engaging in politics with the Mayfield school district.”
Councilwoman Sandra Turner chairs the Mayfield School System Liaison Committee and she said that Mayfield is an excellent school district and there are not enough people taking advantage of it. She said that more young families are moving to the village, however, so there is a higher engagement with Gates Mills Elementary School. Over time, she said that the village has had good relations with the district.
“Isn’t it our role on this committee to make recommendations for a long term plan?” committee member Mike Kennedy asked. He said that he is not advocating to disengage from the Mayfield schools, but said it “shouldn’t be off the table.”
Mr. Reitman said that in recent years, Mayfield school levies have failed in Gates Mills but passed in Highland Heights, Mayfield Village and Mayfield Heights.
Committee members also discussed their income tax. Currently, the income tax rate is 1 percent and residents who work outside the village receive a 50- percent credit on half of the 1 percent tax. Effectively, it is a 1 percent tax rate with a 25 percent credit, according to Councilwoman Ann Whitney, who heads the tax subcommittee.
She discussed various scenarios for changing the income tax such as having a 1 percent tax with no credit, increasing the tax rate and eliminating the credit or increasing the rate with the same credit. Gates Mills is in the process of switching from the Central Collection Agency to the Regional Income Tax Agency. In RITA’s model, the agency assumed that 50 percent of residents have an earned income, and Mrs. Whitney said that may not be the case in Gates Mills.
She brought up the possibility of a 1-mill levy that would bring $221,000 in revenue per year to the village. The village could choose to direct the levy funds for a particular use, such as for the police or fire departments or road repairs. Mayor Karen Schneider said that the roads in the village have not been redone in about 20 years.
Mrs. Whitney said that after the inheritance tax was eliminated in 2013, the village has significantly cut back on its road repairs. Revenue from the inheritance tax was funding about $1 million in capital improvements per year. In recent years, she said that the village has not spent more than $600,000 in road repairs.
“There’s no current plan to redo all the roads,” Treasurer Tim Reynolds said.
Mr. Reitman and Mr. Reynolds agreed that the committee needs to determine where exactly the tax burden would fall. They said that there are two main groups of residents: people with an earned income and people on a fixed income. A change to the income tax rate would affect people who earn wages. A change in property taxes or a levy would affect all village residents. If the village changed the income tax credit, that affects residents who work outside Gates Mills but would not affect non-residents who work in Gates Mills, such as employees at Sara’s Place, the Chagrin Valley Hunt Club and Gilmour Academy.
“All of that plays into how you get a vote to [be approved], either a new levy or real estate taxes,” Mr. Reitman said. “I’m not certain that I know where the sentiment in the village lies.”
The tax subcommittee is planning to meet again later in June.