Celina will consider repealing tax credit

CELINA - A proposed policy change could bring in more than $500,000 to the financially-beleaguered city but would force some citizens to pay income tax to two municipalities if approved by council members.

Celina City Council members on Monday night will vote on an ordinance to rescind the city's one percent tax credit for residents who work in other villages or cities.

The proposal is intended to increase city revenue.

"I think we have to consider it," Celina Safety Service Director Rick Bachelor told the newspaper on Friday. "We are in a situation where we have to look at the alternatives available to us."

Currently, those who live in the city but work elsewhere receive a full credit from the City of Celina.

"Right now if you live in town but work elsewhere where they withhold tax ... we would give you a full credit here as long as you've paid somewhere," City Auditor Emily Stewart said.

"It depends on what the tax is in another community," Bachelor said. "We give up to one percent. If they're only paying a half a percent in the community then they would only get a half a percent credit (in Celina)."

Stewart said according to 2008 wages filed in 2009, the city would take in an additional $573,000 a year.

"That's significant - over a half a million dollars," she said.

Twenty-eight percent of city tax-filers work outside of Celina, Stewart added.

Bachelor said the tax policy would be enacted for 2010, with a final collection deadline of April 15, 2011.

"If it were to pass and people wanted to make estimated tax payments ... they could make arrangements with the tax department to do that and make payments periodically through the year so their tax liability (on April 15) would be less," Bachelor said.

The money would ultimately go into the city's general fund, Stewart said.

At a council meeting earlier this month, Celina resident Fred LeJuene, who moved to the city a few years ago, spoke out against the proposal.

"I think that would be a very grave mistake," LeJuene warned council members.

In addition to the tax policy, council members also are scheduled to vote on an ordinance to establish court fees for services performed by the Celina Police Department and court bailiff.

Both proposals are intended to increase tax revenue.

The city's unencumbered balance for 2010 is projected to be $123,607 - better than a previous estimate of $50,300.

Bachelor said total expenses of the general fund for the year are expected to be $5.93 million, while total income is expected to be $5.43 million. The deficit spending will be covered with $506,460 carryover from last year.

Early projections showed a $1.3 million deficit for the budget. The deficit was eliminated after several reviews and cuts, including reducing overtime, slashing expenditures and eliminating projects.

Income tax collections for March were $154,829 compared with $173,756 the same time last year.

For the first quarter of 2010, the city is behind $70,000 on its income tax collection and it doesn't look promising that the city will hit its projection, Bachelor said.

Monday's meeting begins at 7 p.m. in the courtroom of city hall.