By John Kiesewetter
Enquirer staff writer

MIDDLETOWN - After nearly a year of discussion, City Council decided to ask voters to approve a 0.5 percentage point increase in the city's earnings tax - to 2 percent - on the November ballot.

The increase would be in effect for five years, and would raise about $5 million a year. Half would be designated for repaving about 40 percent of the city's streets through 2009, while the rest would eliminate deficit spending.

The city's "rainy day" surplus will be gone by January 2007, said Bill Becker, acting city manager and police chief.

City Manager Ron Olson has projected a $2.5-million deficit next year.

Mayor Bob Wells said he came to the meeting planning to vote against the increase, but changed his mind. He was satisfied after hearing Becker explain that the additional funds would not allow for replacing frozen police and fire positions, or opening the city pools next year.

"If we ask people to take money out of their pocket and give it to the city, they should know where every dollar is going," Wells said.

Council member Nancy Nix acknowledged that the tax increase could be a tough sell to residents.

"The chances of passing this one issue will be extremely difficult," she said. "We know tax issues are tough. We're realistic. But we're hopeful because we've seen the needs."

At the same time, council refused to place a second issue on the November ballot to reduce the income tax credit for residents who work outside Middletown. The city could have raised about $600,000 a year by taxing residents who work outside the city and pay an earnings tax to another municipality, Becker said. More residents work outside the city (12,400) than in Middletown (10,600), according to U.S. Census data.

Council member Noah Webster called the tax credit reduction "a Band-Aid. We need $5 million, not $500,000," he said.

Before debating new taxes, council honored Robert "Sonny" Hill Jr., 69, the council member and former mayor who died June 22. A black robe was draped over his empty chair.

His widow, Pat Hill, and three sons were presented a framed print of the city building and a resolution declaring Hill "honorary mayor emeritus."

"It was tough coming to tonight's meeting knowing he wouldn't be back," said Dennis Schiavone, who served 11 years with Hill. "He was a good friend. I will miss him."

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E-mail jkiesewetter@enquirer.com