43
Niles scrambles to pay tax refunds
By Jordan Cohen
NILES
Mired in the throes of fiscal emergency since last October, the financially strapped city has to come up with $40,000 to pay income-tax refunds now and perhaps $20,000 more later this year.
No one was able to say Wednesday where the city might find the money.
“That’s general-fund money we don’t have,” said Charles Nader, city auditor. “There’s no money available.”
The shortage came to light during a council roundtable discussion when Lisa Smathers, income-tax director, said only $15,000 had been allocated to the income-tax office for refunds and that the usual amount is in the range of $60,000.
“We’ve been getting two or three calls a day from people asking us why they haven’t gotten their refunds,” Smathers said.
The director said many of the refunds are for an extra 0.5 percent residents who work in other cities paid in advance where they are employed. Council, however, eliminated that requirement retroactive to the beginning of 2014, which means all of those who paid then are owed refunds.
Mayor Ralph Infante suggested the auditor search for funds in unused accounts in the treasurer’s office, but conceded the money will be insufficient to cover the initial $40,000.
“I don’t know where you’re going to get it,” Infante said to the three council members who attended the roundtable.
“We have no choice,” said Steve Papalas, council finance chairman. “We have to come up with that money now.”
Smathers said one company, which she declined to identify, is owed $32,000, but agreed to take a $10,000 credit for tax payments this year. The city expects to reimburse the balance to the firm next year and concentrate for now on residential refunds.
Neither the mayor nor the council members would speculate on how they might fund the additional $20,000 that Smathers said could be needed later this year.
Nearly all government spending, including allocations for the refunds, has to be approved by the seven-member Financial Planning and Supervision Commission that has been overseeing the city’s recovery since January.
Adding to the city’s woes, Infante warned of possible layoffs in the police and fire departments before the end of this year unless overtime in the safety forces is curtailed.
Infante made the admission during discussion of a 0.25 percent income-tax increase that will be on the November ballot.
“Cuts will have to be made this year if all that overtime continues with police and fire,” the mayor said. The city is in contract negotiations with unions representing police and firefighters.
If voters approve the tax hike, it would generate $900,000 annually by its second year. It is the most-critical element of the city’s recovery plan and will have its first reading Wednesday when council meets with the fiscal commission.
If the tax does not pass in November, “we should be all right in the first quarter [of 2016], but [safety forces] cuts will have to be made later in the year,” Infante said.