Niles to consider raising city’s 1.5-percent municipal income tax
By Jordan Cohen
It was not the type of Christmas message that will spread joy among city residents.
Mayor Ralph Infante said Wednesday that he and city council will consider raising the city income tax because the city’s bank balances are rapidly depleting.
“This is a train wreck waiting to happen,” Infante said. “We used to collect $1.4 million in interest each year on our holdings, but because the interest rates are so low, we don’t get more than $30,000,” the mayor said.
“Bah, humbug,” said Councilman Michael Lastic, D-at large. “That’s bad news for this time of year.”
Cutbacks in state funding and reduced property-tax collections add to the city’s woes.
“Local government funds are down by $75,000 and property tax has dropped by $100,000,” said Charles Nader, city auditor. “Our income-tax collections are up, but they’re not enough to overcome everything else. It’s like we’re on a teeter-totter here.”
The city’s 1.5 percent income tax was enacted in 1988 and never has been increased. That may have to change, said Infante, who has often spoken with pride about holding the line on the tax since he became mayor in 1992.
The mayor will meet with council in the first quarter of 2013 to discuss a possible income-tax hike.
“The trouble for us is that by the time the interest rate goes up, we won’t have enough money to earn interest on,” he told council. “We can probably make it through 2013, but 2014 is going to be a tough year.”
Infante declined to speculate on the size of a possible tax increase.
Councilman Steve Papalas, who heads the finance committee, said the city’s bank balances have shrunk from more than $34 million in 2007 to just $8 million projected for the end of this year.
“I agree with the mayor 100 percent that we’ll have to look at increasing the income tax,” Papalas said. “If we don’t find more revenue, we’re going to have to make cuts that will be very uncomfortable.”
The mayor said two positions in both the police and fire departments remain unfilled, jobs have been combined everywhere, and no vehicle purchases are planned.
Council then approved a 2013 budget with a $200,000 reduction for safety forces.