Twinsburg reports $23.1 million in income taxes collected in 2012

by Conner Howard | reporter Published:

Twinsburg -- The city collected $23.1 million in income tax revenue in 2012, up from the $19.9 million provided by the 2.25 percent income tax rate in 2011 -- prompting city officials to question whether the quarter-percent increase passed in 2009 is still necessary.

Council is required to place a repeal of the income tax increase on the November ballot, according to Law Director David Maistros. If Council does not place the repeal before voters, or if the repeal measure fails in the fall, the income tax increase will remain in effect.

Councilor Bob McDermott said he is confident the city can operate if residents vote to repeal the measure.

"If you look at the numbers, you'll see the number was between $16 [million] and $18 million to power the city [prior to the quarter-percent increase]," McDermott said. "Taking the quarter percent out, we would be no worse than $18 million."

"I really think we could live without the quarter percent," McDermott said.

Council discussed the issue Jan. 8, when Regional Income Tax Agency representative Brian Thunberg said income tax collections in 2012 were $23.1 million, up from $19.9 million in 2011.

Finance Director Karen Howse said the increase is partly due to overestimations in corporate tax receipts, which will be refunded this month at a value of around $2.3 million.

"We had an exorbitant amount of estimated income tax receipts to the city," Howse said. "2012 was an inflated year. Accounting with the refunds, the city only went up about 4 percent."

Before the .25 percent increase was passed in 2009 and took effect in 2010, yearly collections hovered between $16 and $18 million from 1998 to 2010.

Thunberg said if the .25 percent increase is repealed in November, the city would see a loss of about $3.1 million in 2014 income tax collections.

"If that's the case, starting in 2014, as a projection, we believe that the city of Twinsburg's tax collections would be $18.5 million," Thunberg said.

Council was also shown projections for income tax collections in 2013 by the third-party income tax collection agency.

"Using the best information that I have at my fingertips right now, I'm projecting the tax collections at about $21.2 million for 2013," Thunberg said. "That number comes from all three of the different categories: you have your residents, you have your businesses and then you also have your corporate or net profit tax dollars."

McDermott added that the city could operate on 2014's projected $18.5 million, while sparing citizens from increased taxes. He added that the city could revisit the idea of an increase if needed.

"I think this is an opportunity for the city to show its sincerity, to maintain a decent city without tax increases and I think it's possible," McDermott said. "Look at what this would mean for the city as to giving back the quarter percent. If we need it in the future, under those circumstances, we'd be able to get it."

Councilor Seth Rodin also has said he supports a repeal of the tax, telling the Twinsburg Bulletin in December that he considered it the top issue facing Council this year.

"We'll work to address the repeal of the quarter-percent income tax hike," Rodin said.

Other Councilors have differing opinions on whether the .25 percent increase should be repealed.

"I would support the repeal, I think we're all just wanting to be cautious ... and having the city lose another big anchor [such as the Chrysler closure] and we're back asking the voters to put another [increase] on [the ballot]," said Yates said. "We're still wanting to see as much information as we can so that we can help guide the community."

Councilor Bill Furey said more information is needed to assess the issue, adding that the city's finances are not as simple as comparing income tax and expenses.

"We have lots of time to decide what we're going to do," Furey said. "I think we need to take our time, understand what we're looking at, pull from other places. I would have come in with more data, because municipal accounting is tricky."

Twinsburg resident Bill Snow said he would be in favor of repealing the .25 percent increase only if the city's budget was stable and crucial civil functions were not affected.

"I don't think anyone wants to see the city fail or come into financial hardship to where safety and services are impacted," Snow said.

Email: choward@recordpub.com

Phone: 330-541-9423

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