Salem Cuts Costs in Half with RITA | News, Sports, Jobs
SALEM — A recent document detailing the Regional Income Tax Agency’s first-year numbers in Salem proved proponents’ point: The change saved the city money.
The operating budget for the city’s income tax office was about $180,000 or more each year, according to City Auditor Betty Brothers. The final cost for RITA to administer tax collections for the city in 2021 was $90,399, according to the letter sent to city treasurer Tod Mumpire.
That’s a difference of almost $90,000 or more, which means the costs have been cut in half.
“It’s an incredible saving,” said Councilwoman Cyndi Baronzzi Dickey.
City council members had already reviewed RITA for tax collection before finally voting in January 2020 to make the change, eliminating the need for the city’s income tax office. On December 31, 2020, the three employees of the city tax office closed the door and turned off the lights for the last time.
Mumpire shared the letter with members of the city council and addressed it at the council meeting on Tuesday evening. He explained that RITA had taken a fee of $183,319 for 2021, representing 3% of tax revenue, but then sent a refund to the city after calculating the actual cost after the end of 2021.
According to the letter, at the end of the year, using a formula based on aggregate transactions processed by RITA and aggregate income tax collections by RITA for all communities served and those same figures for the City of Salem , the actual cost was determined.
RITA calculated Salem’s percentage factor of global transactions and global collections, then took the average of the two percentage factors and multiplied that number by RITA’s net overhead to get Salem’s cost share.
For 2021, Salem’s share of RITA’s costs was $90,399, which resulted in a reduction in the expense reimbursement check sent to Salem for $92,920.
The actual city income tax cost of $6,763,326 collected for Salem was 1.34% of tax revenue, or $90,399.
“For every $100 of taxes collected for your municipality, only $1.34 went to administrative costs for collection, registration, auditing, compliance, record keeping, etc., leaving the balance for your fire, police, street repairs, recreation and other expenses,” said the letter.
“The Council did the right thing by contracting with RITA”, Mompire said.
Brothers said dealing with RITA has been very easy and the city has had no problem getting the income tax money, noting that distributions take place twice a month.
In another RITA matter, Mumpire told the council that there are two upcoming programs that will be implemented. City residents who have not filed or paid municipal taxes or who have been delinquent will soon receive letters explaining the steps to follow to get caught up. In 2023, he said the program would include sending out subpoenas, but he still needed to get information about where people will have to go to respond to a subpoena. City law director Brooke Zellers had asked where people would go, commenting that he didn’t want anyone having to travel to Cleveland.
In other matters, council members approved the 2023 fiscal budget to be sent to the county auditor’s office and adopted the alternative method of allocating the local government fund to be distributed to each community.
Board members have agreed to take a break in August, so the board will not be meeting then. A few council members and Brooke Zellers spoke about the success of this year’s Salem Super Cruise, with Councilman Dennis Plegge, who led the event, thanking the citizens of Salem for supporting the cruise.
Zellers said while walking around downtown on the cruise he noticed some of the new businesses now open and said “We’re starting to have some really interesting businesses. Business is up and it’s great to see it.
The next council meeting will be July 5 at 7:00 p.m. in the council chambers.