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FULL STORY: Ottawa County rings up sales tax hike Thursday

Sarah Weber • Jun 29, 2010 at 10:07 AM


Starting Thursday, shoppers in Ottawa County can expect a to pay more when they make purchases.

That's when a quarter-percent sales tax hike will take effect, since Ottawa County officials approved the hike in March. The increase means the county's sales-tax rate jumps to 6.75 percent, from 6.5 percent.

Ottawa County commissioners approved the increase to shore up cash reserves, after experiencing drops in revenue the past two years. The county's revenue sources -- taxes, fees and investment income -- all took hits in a bad economy, forcing the county to make up the difference with cuts and draws on savings.

If the county's projections are correct, the sales-tax hike will generate an additional $100,000 a month for the next three years. After that, the tax rate will return to 6.5 percent -- unless commissioners take additional action.

Commissioners said they plan to sock away the additional money to cover unexpected emergencies or additional financial burdens the county might face.

One such emergency came in early June, when a tornado blasted through the western end of the county. The sheriff's department spent more than $30,000 to cover overtime pay for deputies who secured the area and helped residents after the storm.

The Federal Emergency Management Agency denied federal assistance for the recovery effort, prompting outcry from elected officials and an appeal from Gov. Ted Strickland.

If FEMA officials don't change their decision, it will be up to the county and townships to pay for the recovery.

The sales-tax hike will ensure the county can pay for such unexpected costs, as well as routine expenses in the future, commissioner Mark Stahl said.

The hike will also act as a buffer for any new costs the county might be responsible for when the cash-strapped state tweaks its next biannual budget.

Such shifts could easily force the county to burn through reserves, putting its excellent Moody's rating in jeopardy. The rating helps Ottawa County and the various political subdivisions inside the county secure good interest rates on borrowed money.

Moody's could downgrade the county if it doesn't have adequate cash reserves, making borrowing for roads and other projects more expensive to taxpayers.

"We don't know what else is coming down the road," commissioner Jim Sass said. "By initiating the sales-tax increase, we're really planning for the future."

This is the county's first sales-tax increase in 25 years. The state collects a 5.5 percent sales tax, so the county's share of the tax will increase from 1 percent to 1.25 percent.

Erie County has a 6.5 percent sales-tax rate, while Sandusky County's rate is 6.75 percent and Huron County's is 7 percent. Sandusky County officials also recently announced they're considering upping the sales tax an additional quarter percent.

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