Changes to the city’s income-tax credits are responsible in part for a $147,000 increase in collections over last year.
The city, however, won’t be able to rely on this income going forward.
Fred Pamer, the city’s income tax administrator, said that in past years, residents working outside the city were given a tax credit of up to 1 percent of their earnings for paying income taxes to the communities where they work.
City council revoked that credit in 2010 because expenses were tight, Pamer said.
He said the decision was made at that time because like many cities, Salem was struggling with a decrease in revenue.
Residents, however, had other ideas. They filed an initiative petition and received enough signatures to place the matter before voters. The reciprocity credit was restored in November 2010. There was, however, a period of 135 days in which no credit was given, resulting in increased collections.
Through the end of July, the city reported an increase over last year of more than $31,000 for income-tax withholding.
During this same period, businesses paid more than $17,000 in income taxes over last year and collections for individuals increased more than $98,000.
Pamer said income-tax collections during this period increased about 5 percent if one does not count the money collected during the time when the credit was revoked.
He attributed this to an increase in employment and in wages.
The withholding category saw an increase because wages have been steady, along with the taxes paid by businesses, he said.
Income tax revenues are divvied up between the city’s general fund and a capital improvement fund.
Pamer said it’s hard to predict what collections for next year will be like, given the nation’s fragile economy.