Published Tuesday, February 11, 2003
Herald Staff Writer
Greenville can raise earned income tax rates on residents and those who work in the borough, Mercer County Common Pleas Court President Judge Francis J. Fornelli ruled Monday as he approved a key part of the town's fiscal recovery plan.
Raising the tax to 1.7 percent for residents and 1.5 percent for nonresidents was required in the fiscal plan developed by Resource Development and Management Inc., the town's recovery coordinator. The tax was previously set at 1 percent. The increase is retroactive to Jan. 1.
Since the increases were approved six week into the year, residents and people who work in the borough but live elsewhere will have to make up the difference in their paychecks.
Fornelli granted the borough's petition with the condition that taxpayers be able to choose if they want the increase taken out of their paychecks over time or if they want to pay the tax in a lump sum at the end of the quarter or end of the year.
"It is not the taxpayers' fault the court did not approve this increase until six weeks into the year," Fornelli said. "It would be more fair to have the (difference in owed) taxes deducted from pay periods throughout the year rather than in one lump sum."
According to Resource Development's study, the average family income in Greenville is about $38,800. At 1 percent, a worker earning $38,800 would pay $380 a year in income tax; at 1.7 percent, the tax goes to $646, an increase of $266.
Greenville landed in the state Act 47 program for distressed municipalities after borough spending outpaced revenues over the last few years, producing a deficit of more than $1.5 million. Under Act 47, borough officials are required to follow some parts of the plan while other parts are just recommended.
Real estate taxes have been raised for the last several years, prompting Resource Development to look at earned income taxes as a source of new revenue. Raising the tax required the court's approval.
Richard H. Miller, president of Keystone Research Inc., presented a report on Greenville's financial situation at Fornelli's request to determine the accuracy of the revenues and expenses in the borough's budget.
"Greenville borough is broke ...," Miller wrote. The report indicated the town should be in better financial shape with the higher income taxes and under the guidance of Resource Development. Despite the coordinator's efforts to bring the town's budget into line, the financial "bleeding continues as Greenville continues to spend more than it takes in and needs another loan from the state to balance this year's books," the report states.
Fornelli asked if, in his opinion, Miller thought Resource Development's plan would account for fiscal recovery for the borough.
"It starts them on the road to recovery," Miller said, "and a very good road it is, but it really only takes the borough through the first three years."
In the report's conclusion, Miller -- who also serves on the town's municipal authority -- said getting Greenville out of its financial woes may depend on the state Legislature "taking a close look at local government reform."
"Services are provided to too many citizens and businesses not paying a fair share. Unfunded mandates require levels of services that are unaffordable. Laws that made sense 20-40 years ago do not today," Miller wrote.
Miller also speculated that Resource Development is "not ready to 'go public' with the necessary deep cuts in local expenditures. The taxpayers may not be ready for this stage of the debate."
You can e-mail Herald Staff Writer Amanda Smith-Teutsch at: ateutsch@sharonherald.com