Garfield Heights Tax Credit Reduction

Recent statements made by the Mayor Vic Collova about the city budget make it clear that the budget just doesn't balance.

Ellen Psenicka reported in the Neighborhood News January 27th edition that:

"The mayor said the city ended 2009 with a $1.4 million deficit, 'which was better than we expected'."

Rachel Szuch reported in the same paper that:

"At monday's meeting of Garfield Heights City Council, Mayor Vic Collova announced that while the city's 2010 fiscal recovery plan could be completed in about an hour, he is holding out for more time to avoid adding extra burden to Garfield Heights residents."

He is further quoted as saying

"We're still coming up about $900,000 to $1 million short,"

So what ideas have been getting bandied about to solve this fiscal short fall?

1. Red Light Cameras - these were already in the budget and he has said he doesn't expect them to net the city the $945,000.00 ex-mayor Longo had budgeted. He has said he expects it to be more like $300,000.00 and the city will need to make up the other $600,000.00 some way.
2. Trash Collection Fee increase - this is included in our taxes currently but they have spoken about passing a fee of $15.00 per month on home owners. This would appear as a assessment on property taxes. $15 x 12 = $180 more per year.
3. Tax Credit Reduction.

SO What is a Tax Credit Reduction and Why Should I Care?
Well, i think everyone should care.

But I understand the feeling of ...."I don't have to pay it, so if it helps the city- I'm for it!"

Most residents of Garfield WILL PAY this tax credit reduction.

It sounds like you will pay less tax doesn't it?

Actually here's how it works...(I am simplifying it a little)

If you live in Garfield Heights and work in Garfield Heights you won't notice the change.
When you file your municipal (City) tax you are charged tax for the city you work in and pay in the city you live in.
The city where you live gives you a "tax credit" for what you have already paid in taxes where you work.

You multiply the amount you paid times that "tax credit" percentage Garfield Heights allows (currently 100% for nearby cities in RITA area).
This is your "adjusted tax paid amount"

You then multiply the current tax rate for Garfield Heights (currently 2%) times your income. This is your Garfield Heights "Tax Liability amount"

You subtract the "adjusted tax paid amount" from your "tax liability amount" and the result is what you need to pay on your municipal taxes.

an EXAMPLE:

You make $30,000.00 last year working in Bedford but you live here in Garfield Heights.
Your W2 they sent you says Bedford's tax rate is 2.25% and you paid $675.00 in tax.
You are filling out you Garfield Height Municipal (City) Tax with the RITA form.
So you calculate how much Garfield Heights says you owe them.
Garfield Heights tax rate is 2% so you do the math $30,000.00 x 2% = $600.00.
"Hey this looks good! I paid Bedford $675.00 and I only owe Garfield Heights $600.00...I'm going to get $75.00 back.
Whoopie! the kids get drinks and popcorn at the movie."

You forgot the Bedford Tax paid gets multiplied times the current tax credit percentage.(currently 100%)
You can take the kids to the movie and get popcorn and sodas your getting $75.00 back.

Now the TAX CREDIT REDUCTION:
IT WILL REDUCE THE CREDIT PERCENTAGE TO 50% from the current 100%.

let's see what that means.
You still paid Bedford $675.00. check
Your Garfield Heights 2% tax rate means you would owe them $600.00 check all the same so far.
But this time when we multiply the Bedford Tax paid times the new 50% multiplier the tax amount we get credit for is only $337.50.
So when we subtract that new amount from the tax we owe Garfield Heights we get..
$600.00 - $337.50 ($675.00 x the new 50% tax credit rate) = $262.50 YOU NEED TO PAY TO GARFIELD HEIGHTS.!!!
That's how a "TAX CREDIT REDUCTION" works.

Instead of telling you they are raising taxes they tell you:
"It is a TAX CREDIT REDUCTION".
You think you will pay less tax in fact it is a tax increase.
Unless you work and live in Garfield Heights or don't work at all.
But how many of us is that? not many that is why this will bring income into the cities budget.

One last thing:

Did I forget to mention under the current Charter...
YOU DON'T GET TO VOTE ON THIS TAX (INCREASE) CREDIT REDUCTION !
If council passes it- it is done unless we expressly forbid that with a charter amendment.
Please CONTACT US to sign a petition to get us to vote on adding a Clause to the charter to require this type of change gets put on the ballot for residents to decide if they want it or not.