By Jordan Cohen
More than 2,300 residents who are employed in another municipality may be in for a shock when they file their 2013 Niles income-tax returns next spring. They’re going to owe the city more tax money—approximately one-half percent of their taxable income.
Residents who had been credited with paying the full amount of Niles’ 1.5 percent income tax elsewhere will find that is no longer the case even if they pay a higher income tax where they work. An ordinance quietly passed by city council in a special meeting July 5 reduces reciprocity — the credit for tax payments to another municipality — to 1 percent. That leaves residents responsible for the remaining half percent of the Niles tax.
As an example, a Niles resident employed in Warren and making $40,000 in taxable income would still owe $200 despite paying Warren’s higher income tax of 2 percent.
“Other cities are reducing reciprocity, and it’s just a half-percent,” said Mayor Ralph Infante. “It’s not a tax hike, and I haven’t had any complaints.”
However Councilman Steve Papalas, D-at large, said he has gotten what he describes as a mixed reaction. “I’ve talked to a half-dozen people, and four called it a really bad idea, and two just shrugged their shoulders,” Papalas said.
“I wasn’t crazy about it, but this was the easiest way to do it because we don’t want another tax hike in the city,” said fellow Councilman Reggie Giancola, D-at large.
City Treasurer Bob Swauger said the reduction in reciprocity could earn the city as much as $315,000. “Our income-tax collections are up by $115,000 from last year, but it’s still pretty flat,” the treasurer said.
Figures provided by Swauger show that Niles’ income-tax collections declined by nearly $800,000 during the recession and recovery. Swauger estimates the 2013 collection will generate revenue of $5.8 million.
The mayor said he feels there is no other choice. “We’re at bare minimum and we’re spending $20,000 a month on hospitalization insurance,” Infante said. “I don’t want to see us get down to nothing.”
The city, however, pays all the hospitalization for its 175 employees. A spokeswoman in the payroll office said no pay is deducted from the employees for their medical premiums.
Papalas said he hopes the mayor will agree with his suggestion on use of the revenue generated by the reduced reciprocity.
“I’m hoping we use it for the fire department because they really need a new truck,” the councilman said.