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|12-05-02: Celina income tax credit may
|Councilors also look at lowering taxable age to 16 to raise revenue
By TIMOTHY COX
The Daily Standard
Celina City Council will be asked to consider repealing the local
municipal income tax credit and lowering the taxable age to 16 at Monday's regular council
Celina city officials are looking at the options as a way to put off
having to ask residents for an increase in the city income tax to help pay for strapped
city services and as part of their ongoing review of the city's tax code.
Council's personnel and finance committee made the two recommendations
and a couple of others during a Wednesday evening meeting.
Taking away the credit could mean an additional $400,000 in general
fund revenue, officials said. But it also would mean that residents who live in Celina but
work elsewhere would have to pay local income taxes in both towns. Most cities generally
grant a credit that waives local taxes if income taxes were paid to another political
Greenville is the only city in the area that has gotten rid of the
credit. A few other towns, such as Rockford and Delphos, have lowered the credit so local
residents still must pay a portion of their local tax burden, even if they work in another
Council member Collin Bryan said repealing the credit is something many
cities are looking at doing. He predicted a "domino effect" of towns joining
ranks after a couple lead the way.
"Let's be at the head of the line," Bryan said.
Council member Angie King said dropping the credit amounts to
"double-dipping" by the city.
Others, though, noted that city residents who live here but work
elsewhere now enjoy the benefits of city services but pay no local income taxes to help
Committee members voted to recommend that council amend the update of
the tax code to repeal the tax credit effective April 1, 2003. By delaying the move
through the first three months of the year, it essentially grants new taxpayers a 25
percent credit for the year, council members said.
City officials also talked Wednesday and previously about seeking an
increase in the city's 1 percent tax rate. Some said they believe dropping the credit
would buy the city some time.
Safety-Service Director Mike Sovinski estimated the change might stave
off a tax hike for five years or so.
City officials are poring over the tax code to squeeze every available
dollar out of it to relieve budgetary pressures. They talked about, but made no decisions,
on where any additional revenue should be applied.
The city street department and parks department are the most
cash-strapped, Mayor Paul Arnold and Sovinski said. For example, Sovinski has estimated
the city should spend at least $350,000 annually on streets, but only a fraction of that
amount was spent this year due to limited funding.
"We desperately are looking for every way we can increase revenue
in the city," council member Denny Smith said.
Committee members also agreed to recommend that council lower the
taxable age for city income tax from 18 to 16.
King said she does not agree with taxing minors and said she has
support within the community for her stance. But Bryan noted it now costs the city money
to process tax returns for those under 18 and that children still are subject to state and
In addition to the savings through processing tax returns, the city
might generate $20,000 or so by taxing the younger crowd, officials said.
Council member Sharon LaRue admitted she is "on the fence" on
the issue but went along with committee members in a unanimous vote to send the issue to
the full council.
Committee members also recommended council act on a couple of other
changes to the tax code. One is simply a wording change regarding corporations that does
not affect taxability of any entity. The other expands existing tax laws to allow the city
to go after management and fiscal agents of companies that fail to turn over tax
collections withheld from employees to the city.
Auditor Pat Smith said the changes might not ever result in the city
collecting more tax revenue, but said it at least establishes a viable process for the
city to act on.
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