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Tax collection firm can provide insight into city



Published: Sat, July 23, 2005 @ 12:00 a.m.



The McKelvey administration and Youngstown City Council have done the right thing in turning to an outside agency for income tax collections -- but not just because of the possibility of an additional $300,000 in new revenue flowing into the general fund in the first year.

There now exists an opportunity for government and the public to get a true financial picture of the city.

Here are some questions we believe the Regional Income Tax Agency should answer:

What percentage of the income tax revenue is paid by city residents, compared with nonresidents? What percentage of the total number of taxpayers work in the public sector, such as city and county governments, the school system and Youngstown State University?

How many individuals whose offices are located outside the city's limits come into Youngstown to conduct business? Do they pay income taxes on the money they earn working in the city? Are lawyers or doctors who have their offices in the suburbs but practice in the Mahoning County Courthouse or St. Elizabeth Medical Center on the tax rolls?

With all the construction taking place -- new schools, the convocation/convention center, the various downtown projects -- has the city been collecting all the income tax that should be paid by out-of-towners working at the various sites?

Major client

The RITA, which was created in 1971 by a regional council of governments, collects income tax on behalf of 116 communities in Ohio, including Girard, Campbell and Wellsville. Youngstown would be its largest client in terms of population.

The agency, which would open an office in downtown Youngstown and staff it with five people, including three employees from the city's income tax department, would charge a fee of 2.5 percent of the total income tax it collects.

The board of control, made up of the mayor and finance and law directors, is expected to approve a one-year contract with RITA next month. The one-year pact will allow city government to evaluate the effectiveness of the agency and to determine whether the relationship should be extended or if the income tax division in the finance department should be expanded.

State Sen. Robert F. Hagan, D-Youngstown, the Democratic nominee for mayor in the November general election, claims that communities are leaving RITA because of significant cost increases for the services provided. Hagan, who is being challenged by Republican and independent candidates, should make public whatever proof he has to support his claim of communities bailing out because of cost increases.

Anyone familiar with the workings of city government will know that tax delinquencies have been a long-standing problem and that the ability to go after everyone who should be paying income tax has been undermined by a shortage of staff. There is no way city government can afford to hire all the people it needs to collect all the income tax owed.

The hiring of RITA appears to be a good move, but only time will tell.




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