Salem City Council tables RITA to address concerns
SALEM–City council agreed unanimously Tuesday to table pending legislation related to the Regional Income Tax Agency known as RITA, contingent on getting some answers to questions outlined by city Law Director Brooke Zellers.
“I would like to have answers to these questions before we vote on it,” Councilwoman Cyndi Baronzzi Dickey said.
Dickey moved to table the ordinance, which was scheduled for its final reading and a vote, saying some of Zellers’ questions were very good and brought up issues that council needs to have addressed. She said an email from Zellers was received by council members this week and her decision on contracting with RITA may be contingent on the answers to the questions.
Councilman Sal Salvino seconded her motion to table the ordinance, then there was some discussion, with Councilman Geoff Goll asking for clarification on what was being tabled and whether they were still talking about two separate ordinances related to RITA, one to allow the mayor to enter an agreement with the agency for administration and collection of the city income tax and another for council to give its approval of the agreement.
The only ordinance on the agenda was to authorize the mayor to enter the agreement as approved by council. Zellers said if the ordinance had passed, all it was allowing the mayor to do was negotiate the agreement. The agreement would still have to come back to council for approval. Zellers also said he had received some answers to his questions, which he said was sent to everybody. Dickey said she didn’t see that before the meeting and wanted time to review it.
All seven council members voted to table the ordinance. Since this was the final council meeting before the end of the year, that means the decision on RITA won’t come until next year, when Dennis Plegge will be the councilman representing the Third Ward, replacing Goll, who lost to him in the recent election. Goll has indicated he’s against RITA, noting that the decision will cost the four workers in the city income tax office their jobs for an estimated savings of $50,000 that’s just that, an estimate with no guarantee. Plegge has repeatedly campaigned that he favors RITA.
When asked about the timing of the decision to table, Dickey said she has multiple concerns, including that nowhere in the agreement does it mention having people from RITA here in the city at tax time and also whether the interest comes back to the city. She said this isn’t being considered because the city doesn’t have a good tax department — it has to do with thinking about ways to save money for the future.
Council passed the 2020 budget during the meeting and Goll pointed out the $400,000 differential between expenses and revenue and the fact that the cash carryover to keep the budget positive is continuing to get smaller. He said that’s something council needs to look at, how to cut expenses, and Dickey said she agrees with that. If council is going to make a decision on RITA, she said “we want to do it right.”
One of the concerns Zellers raised dealt with the .25 percent additional income tax, which was passed by voters for a specific purpose for improvements to streets, alleys, parking lots, sidewalks, storm sewers and gutters. The tax was recently renewed for another five years, but by a slim margin. There’s a recount today of the results. He said the RITA agreement was that the agency would keep 3 percent of all income tax collected regardless of purpose and if 3 percent came out of the additional .25 percent income tax, that money would have to come from the general fund to keep the .25 percent income tax whole.
That question was emphatically answered by city Auditor Betty Brothers and Mayor John Berlin that the 3 percent fee to RITA will only come out of the general fund. Retired firefighter John Tarleton had raised the issue during the meeting. Council members gave a mix of answers regarding his concern that they follow what voters passed, for all the money to go where it’s intended. Then Brothers was asked about the income tax.
“None of the money from the .25 percent will be used to pay any of the fees,” Brothers said.
Former longtime city councilman and city treasurer Bob Tullis addressed council, saying he’s not for or against RITA, but he felt compelled to talk about the service provided by the city income tax office. Tullis is a member of the city Income Tax Board of Revision, an appointed volunteer board that meets on a yearly basis to hear appeals from taxpayers on complaints about the tax department. In the last 20 years, he said only one case came before the board and it was solved in a matter of minutes, in favor of the tax department.
That type of performance needs to be recognized and he called the income tax office one of the “crown jewels of the city government.” The personnel treat every taxpayer the same. He also said the personnel deserve to be treated fairly.
According to Tullis, there are two sets of numbers that are concrete: the tax receipts have increased every year for 19 years and the cost of the department has remained steady. The big unknown is how RITA will perform. Nobody can say for sure if the collection will be greater or not.
“This is a roll of the dice,” Tullis said.
Former Treasurer Dr. John Conrad also spoke, noting that the fee to RITA has been stated at 3 percent of the tax collection, but that some of the money may come back. He said there’s no guarantee that the city will get any of that money back, plus he said some cities are paying RITA 4.5 percent. He said the fee to RITA will go up.
Salvino said he did his own financial study, looking at what the income tax brought in and what the income tax department was budgeted. He averaged the percentage increase and said it totaled 3.55 percent for the income tax receipts. The average cost of the tax department he figured at 4.77 percent of the collection, for a differential of 1.22 percent. When he looked at the next 30 years and forecasted the percentage, the differential increased to 2.10 percent, showing him that the “tax department costs continue to escalate every year.”
Conrad questioned the figures and whether they take into account refunds. Current city Treasurer K. Bret Apple, who has been very vocal against RITA, said that the income tax office appropriation in the budget has to allow for possible refunds, so the numbers might not be what was actually spent for operations. He said the cost is likely closer to the 3 percent.
Plegge kicked off the speakers who addressed council, acknowledging he’ll have to make some tough decisions when he takes office in January. He said he’s going to make some mistakes and he’s going to get knocked down but he’ll get right back up. When he was campaigning, he said the people he talked with weren’t interested in the politics, they talked about the pothole in front of their house or other concerns they had. They just wanted someone to listen to them.
When he lived out west and he and his first wife divorced, he and his son both made a commitment to do something good in their communities. He ended up back in Salem and he said that’s why he ran for city council, to fulfill a promise to his son, who died at age 19 in an accident.
Goll again spoke out regarding the four workers who will be affected by the RITA decision, stressing “the city is about service, it’s not a business.”
He questioned having residents forced to drive to Youngstown for help with their taxes if RITA takes over, saying he appreciates the people who have provided the service to the city all these years.