London Mayor Dave Eades isn’t sold on turning city tax management over to an outside agency.
In comments to city council on May 1, Eades urged careful evaluation of a proposal by the Cleveland-based Regional Income Tax Agency (RITA) to bill and collect London income taxes.
RITA representative Chuck Hawk told council members on April 21 that London could save $142,000 annually by contracting with his agency.
Fate of the existing tax office and its staff remains uncertain under a RITA contract, although Hawk’s proposal stipulated a local “tax administrator” position.
Eades said RITA marketing literature lacks detail.
The agency will direct-deposit revenue into a city bank account on the first and 10th day of each month.
“The city currently deposits daily and we have a constant cash flow,” Eades said. “Can we manage without any deposits for 20 days or more? … The lack of cash flow could create some planning and management problems.”
Hawk estimated RITA’s fees at $112,000 to $125,000 annually, based on about $3.5 million in London’s total income tax collections for 2013.
However, Eades said total collections will increase to $5 million in coming years, meaning RITA’s fees will run $155,000 or more.
“This fee is reviewed annually and is increased as needed to cover the costs of the service,” he said.
He questioned services included in RITA’s contract “package,” including printing, paper and postage.
“I am aware from talking with other entities…that (delinquency) letters run $15 apiece,” Eades said. “It has been a few years…so I don’t know if the costs still remain the same.”
Hawk said any court time spent on delinquent collections cost extra.
Eades urged council to obtain details regarding salary and benefits for RITA employees, noting it is a public agency subject to Ohio open records laws.
Hawk said RITA cross-checks IRS records to identify all eligible taxpayers in the city.
Eades said London’s tax department can obtain the same information through a central collection agency for 5 percent of the delinquent money.
“Over the years, many people in London were upset when various services left town such as Ohio Edison, Ohio Bell, Columbia Gas and cable TV,” he said. “Now council is looking to disband our own service of local tax collection.”
He said 20-25 percent of city taxpayers seek help for preparing forms at the local office. That service is free, Eades noted.
“That service goes away when the job is outsourced,” he added.
Council president Pat Closser forwarded Eades’ queries to Hawk and is awaiting response.
He said members of the finance committee will discuss the issue further at a meeting set for 5:30 p.m. May 19 in council chambers.
Jane Beathard can be reached at (740) 852-1616, ext. 16 or via Twitter @JaneBeathard.