Recordpub.com - Kent income tax credit may be reduced Council eyes decrease to 1.5 percent for residents working outside city

By Matt Fredmonsky

Record-Courier staff writer

Kent residents who work outside the city and pay no income tax to their hometown may see a new tax deduction on their pay stubs come Jan 1.

Kent City Council has voted to begin the process for reducing the income tax credit of 2 percent Kent grants its citizens who hold jobs outside the city and pay income taxes only to the municipality where they are employed.

The tax method is one of several council members have been considering to counter an expected budget deficit due to the city's overall expenses outpacing total revenue.

Councilman Rick Hawksley, who made the motion to reduce the income tax credit, said the money generated would keep the city from dipping into its cash reserves -- which total approximately $11 million -- and would allow for a balanced budget without cutting services to residents.

"That was one of the key points that I think was very helpful from the (Blue Ribbon Finance Committee)," Hawksley said. "And that is it's a downward spiral. Once you start to reduce your services the quality of life in the community is diminished."

Kent Budget and Finance Director Barb Rissland said, based on initial drafts of the tax credit reduction ordinance, residents who work outside the city would no longer receive a full 2 percent credit from Kent but instead would receive a full credit for a maximum of 1.5 percent.

"That's my understanding," Rissland said. The language, however, could change. "If they live here and work in another taxing entity, then we'll give 100 percent credit and cap it at 1.5."

The decision came during a finance committee meeting held July 2. The reduction, if approved upon a final vote, would take effect Jan. 1, 2009.

The first official vote is expected to be held by council July 16. Members agreed last week to hold three votes on the issue in order to allow for thorough consideration, according to the minutes of the finance meeting from July 2.

Council also voted to schedule a future finance committee meeting to discuss potential income and property tax increases, to have city administrators continue to examine cost-savings methods and to examine changing a city charter requirement calling for 25 percent of the city's income tax revenue to fund capital projects.

Income and property tax increases and a charter change would require approval by a majority of the city's voters, but the income tax credit reduction can be implemented by council without voter consent.

Councilman Garret Ferrara, who is vice chairman of the finance committee, said he believes the additional money generated should be used to fund economic development projects that could ultimately spur enough job growth within the city to make up for the deficit.

"The whole premise of the blue ribbon panel was fairness in terms of who pays for it, how do you pay for it and that the money goes toward economic development," Ferrara said. "I think if you present this as being for economic development purposes it makes it easier to swallow a somewhat bitter pill."

5.	Posted by jlguy1 August 2, 2008
	Instead of an income tax credit reduction, I agree that an overall income tax increase of .5% should be presented to the voters. That way, you get an additional .5% from all WORKERS in Kent, and an additional .5% from those who live in Kent but work in a city where the tax rate is only 2%. Remember that all workers at KSU and Kent City Schools, many of whom do not live in Kent, are paying 2% to the City of Kent. If people only paid city income tax in the city where they live, this would bankrupt Kent. The reason I believe this is that an article in the Beacon Journal listed the poverty rate in Kent at 25%, which means that a lot of people aren't working at all or are working at below poverty level wages. Maybe we need to get rid of some of the subsidized housing.

4.	Posted by BostonTeaParty July 10, 2008
	Back in 2006 when the Blue Ribbon report was crafted: gasoline ranged in cost from $1.99/gal to approximately $2.55/gal (with a couple higher spikes); food was significantly cheaper; property taxes were lower; we were not faced with an additional double digit increase in natural gas; electricity increases were not anticipated to be close to double digits; etc etc.. Comparing the results of a study in 2006 to our outrageous economic situation in 2008 is flawed. The only constant over these few years has been the paycheck that didn't go up enough (or at all) to keep up with the increases. Prior to entertaining the idea of unfairly burdening 65% of the City's residents with additional taxes: 1.The City Council should demonstrate to taxpayers that ALL fat has been trimmed from the city government and that there have been success stories that benefit the entire City (not just the downtown area). 2. Demonstrate that money previously earmarked for economic development has brought a viable economic stimulus to Kent, i.e. not just enterprises that do not pay a living wage. Frankly, I also think that we have more than enough bars and tattoo parlors. 3. Work on long range plans that impact ALL residents of this City: students, renters, homeowners, those that work in Kent and live elsewhere, those that live here and work elsewhere.... We will never have a unified City when one group unfairly carries a higher tax burden. 4. There has been talk of potential raises for Council members. Council: please demonstrate your willingness to stand in solidarity with the people in this City by not voting a raise for yourselves. 5. Don't spend $20,000 on an unneeded statue for the bicentennial. The money is better spent elsewhere. 6.I would be more than glad to pay my whole 2% to Kent instead of the City where I work. So.... work to change the reciprocity laws. Instead of reducing reciprocity beginning in January 2009,work on solutions to the problem that impact all of us equally. People will not be attracted to live in a city where they know that if they cannot find work here in town, that they will have to pay more to live here. If decreasing the reciprocity passes and adds needed funds to the city coffers; who will guarantee that the next time there is another need.....that the Council won't vote for another decrease in reciprocity? It is a slippery slope folks, a fast fix instead of standing with each other and implementing solutions that result in long term change. If you want to raise additional funds, put an issue on the ballot to increase the income tax. I am sure that folks in this city will clearly let you know how they feel "If you build it, they will come." If you tax us too much, we will leave. I urge all Kent citizens (and especially those unfairly impacted by this potential decrease in reciprocity) to attend the July 16th council meeting and voice your opposition. This is the first of three meeetings on this issue. Too bad there is no harbor in Kent. It might be time for another tea party.

2.	Posted by Dowhatsright July 9, 2008
	Fairness, hell they do not know the meaning of fairness. If it was fair, you would only have to pay tax where you lived. That is the only way you would have a say as to how much the tax should be and what how it is to be used. The cities won't do that, because they now all won't to tax the resident and the worker. They keep coming up with new taxes to increase their revenue. Taxes like storm water removal, charge for police response, charge for fire department response, fees for everything. Now they are running out of new ways to tax. So they use things like water and sewer as revenue sources. They know you have to have them and they can raise the price whenever they want. If the cities want to get their taxes, they should fight the laws making you pay where you work. The cities that tax the worker are nothing but greedy. They claim that the workers use their streets and service and thus should pay for them. Lies all lies. If a worker is in an accident his insurance company is charged for the fire department response while usefully the resident is not. Also, the city depends on the work force to draw the plant and business to their city, from which they get a large chunk of money in various taxes. If the work force is not there the plant will go elsewhere. The towns and cities have got so greedy. They can past a tax on the worker without fear of being voted out of office. I say if they are in office now, any office, vote them out.