Vermilion Council Restores Full 1% Tax Credit After Years of Controversy

In a closely watched vote Monday night, Vermilion City Council passed Ordinance 2025-12, restoring the full 1% income tax credit for residents who pay municipal income tax elsewhere.

Council President Steve Herron led the reading of the ordinance. After some debate, the measure was approved by a 4–3 vote, with the following breakdown:

• ✅ Yes Votes:
  • Greg Drew (Ward 2)
  • Drew Werley (Ward 3)
  • Gary Howell (At Large)
  • Jeff Lucas (Ward 4)
• ❌ No Votes:
  • Patricia West (Ward 1)
  • Brian Holmes (Ward 5)
  • Steve Herron (President)

This change reverses a policy put in place back in 2013, when the city reduced the tax credit to address a financial shortfall. Residents who worked in another municipality were previously taxed by both their workplace and Vermilion — receiving only a partial credit toward their city taxes. The change will now allow them to receive a full 1% credit again, effective 30 days after the ordinance’s passage.

Councilmembers debated the issue at length before the vote. Several expressed concern about Vermilion’s aging infrastructure and the effect the tax credit restoration could have on street funding. Others emphasized the importance of tax fairness, especially as residents face continued economic pressures.

Finance Director Amy Hendricks presented detailed financial information during the meeting. She noted that the loss in revenue from restoring the credit could amount to $1.1 million by the end of 2026, and that funds for road repairs would need to be reconsidered. However, she also pointed out that the city had recently transferred $2 million from the General Fund to support street and infrastructure projects, as reflected in the city’s 2025 tax budget.

The conversation underscored the long-standing tension between balancing budgetary needs and providing tax relief to residents. The ordinance’s passage follows several failed attempts in recent years to revisit the credit structure.

Residents on streets like Idleview, Birchview, and Brownhelm Station Road have repeatedly voiced concerns about deteriorating road conditions. Though the vote means less dedicated revenue for those repairs in the short term, council members indicated future funding mechanisms, including potential levies, may be explored.

The change is one of the most consequential tax policy decisions made by the Vermilion council in the past decade and comes after years of debate, missed videos, and questions around how the original policy was changed without a public vote.

With the restoration of the tax credit now approved, some council members and residents are calling for a fresh look at long-term funding options for Vermilion’s aging infrastructure. A potential road levy is potentially being considered as one solution to address widespread concerns over deteriorating streets. From Idleview to Birchview and Brownhelm Station Road, residents have voiced frustration over potholes, crumbling pavement, and poor drainage. Council acknowledged the urgency, and several members seemed to have signaled interest in placing a levy on a future ballot to let voters decide whether to invest more directly in the city’s roads and public works.