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City's income taxes flow at all-time high
(by Sue Reid - May 30, 2012)
City's income taxes flow at all-time high
By SUE REID
This March and April both were all-time highs for municipal income-tax collections in Solon, Finance Director Dennis Kennedy said last week. "That's a good precedent," he said.
Total collections for March were $3.419 million, and, in April, they were $5.493 million.
The average monthly income-tax collections from all sources are at $3.717 million this year. For 2011, the average monthly total tax receipts were $3.29 million.
Through April, withholding-tax collections totaled about $10.8 million, which is 1.2 percent higher than comparable collections in 2011, which were about $10.7 million. In 2011, the average monthly withholding collections were $2.45 million, and thus far this year the average withholding tax per month is $2.7 million.
Mr. Kennedy presented to City Council's finance committee with a summary of the collections, as well as comparative data for tax years 2006 through 2011.
He said Solon has been more fortunate than most places as the business base in the city is "probably stronger proportionately than other communities and a little more stable."
Solon's income-tax collections are subject to general economic conditions, he said. "The biggest component is withholding tax, which is based on payroll," Mr. Kennedy said. "If something severe happened in the economy that caused a business to reduce staff or freeze payroll, that would have an immediate impact on the city."
Based on the estimate of net tax collections, after refunds, of about $38 million for this year, the city is slightly more than $250,000 ahead of the cumulative projections of the first four months.
"Although the year started with lower-than-predicted collections in January, we have recovered sufficiently and continue to record total actual collections in excess of our original monthly projections," Mr. Kennedy said.
"The good thing is, it's not going down," he said of the collections. "We did project conservatively at the beginning of the year and are a little over a quarter of a million dollars ahead, which is good."
Individual collections are the only source that is running behind comparative 2011 tax revenue, Mr. Kennedy said. Some of that decrease may be attributed to Solon residents working in Beachwood, where the income-tax rate was increased to 2 percent last year, he said. "That increase would allow those residents a full credit on their 2011 taxes and eliminate a 0.5 percent amount due to Solon."
The city collects a 2 percent income tax on the wages of people who work in Solon. Of the income-tax revenue, 75 percent is used for general-fund operations, which is primarily payroll. One-fourth of the city income tax is used for infrastructure, such as road projects.
The comparisons he provided to the committee are "a good visual to see how things are going, Mr. Kennedy said. "You can tell from late 2007 and 2008 where things dropped everywhere, and it was immediate in terms of revenue."
Income taxes are the "biggest component in terms of revenue for the city, so we need to keep a close watch," he said.
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