By Erica Solvig
Enquirer staff writer

LEBANON - It's now up to the voters here to decide whether increasing the income tax rate is the way to fix the city's budget.

City Council Tuesday night voted to put a proposed tax increase on the Nov. 2 ballot. If approved, the income rate would rise from the current 1 percent to 1.25 percent - the first increase in more than 30 years, according to city officials.

The increase would generate an additional $1.3 million a year for city services such as police protection and road improvements.

"This is not a cure-all," Councilman Norm Dreyer said. "This does not solve all the financial problems of the city. But it is definitely a help. Most important, it puts the question to the voters."

Though they stressed that the city was being run on a bare-bones budget and needed more revenue, council members held off from removing the current 1 percent income tax credit that residents receive for taxes paid to other municipalities.

A citizens advisory committee had suggested that temporarily eliminating the credit might be a shot in the arm for the current budget. Projections show that by the end of 2004, there will be only a 43-day cash reserve of $883,000, though committee members suggested the general fund should have an end-of-year balance of at least $3 million.

But several residents have spoken out against the idea of eliminating the credit. Even if the city had stopped allowing the credit, council members say, the city wouldn't even see the money until much later this year - so it would not be the immediate help some had hoped for.

The issue voters have to decide now is whether increasing the earnings tax - the single largest source of revenue for the city's general fund - is the way to boost city coffers.

In 2002, voters said no to an income tax increase from 1 percent to 1.5 percent.

"When you talk dollars, when you talk people's pocketbooks, that's a very tough issue," Mayor Amy Brewer said.

E-mail esolvig@enquirer.com