The Bloomington City Council voted to raise the local income tax by 0.69% at its meeting Wednesday, a reduction from the initial proposal of a 0.855% increase.
The tax increase was proposed by Mayor John Hamilton at a council meeting April 13 to fund four categories: public safety, climate change preparedness and mitigation, equity and quality of life, and essential city services. Although the vote was expected to take place last week, it was postponed due to the absence of a council member.
Councilmember Ron Smith proposed an amendment to lower the tax rate increase from 0.855% to 0.69% at the meeting May 4, which passed unanimously. Monroe County citizens currently pay a 1.345% local income tax rate, which will raise to 2.035% after this resolution goes into effect.
Councilmember Kate Rosenbarger said she was glad to see the council compromise and hopes the momentum will continue for the rest of the term.
Councilmember Dave Rollo supported the amendment to reduce the proposed increase to 0.69%, but said he felt even the reduced tax rate increase would still harm middle and low income residents. Rollo said cost of living increases have made it a bad time to raise taxes.
Rollo motioned to postpone the vote until May 18 so the council could continue to lower the proposed increase. His motion failed with three council members voting in support of postponing the vote, but six voting against.
The tax increase would apply to all of Monroe County because all decisions regarding local income tax stem from the Monroe County Local Income Tax Council. However, Bloomington City Council controls 56.7% of the voting power in the LIT Council, meaning unanimous decisions from Bloomington City Council automatically have majority approval.
Councilmember Steven Volan said he is supportive of increased funding for public transit.
“It would be transformative,” Volan said.
Councilmember Susan Sandberg said she was concerned how the tax increase would affect rural residents outside of Bloomington who may not have the same quality social service network.
“We have more here to consider than just what’s best for the city of Bloomington,” Sandberg said.