Contradicting testimony in Scranton's commuter tax hearing that the city had not received certain wage taxes two years ago from the Single Tax Office, officials from that office said Thursday it had remitted $600,000 to the city in 2010.
Wednesday's ruling by a panel of judges rejecting the commuter tax cited testimony from city Business Administrator Ryan McGowan that the city annually keeps more than $500,000 in earned income taxes on nonresident commuters whose hometowns don't have an EIT, but the city "inexplicably" did not receive any of this tax in 2010.
Mr. McGowan also testified during a commuter tax hearing last week that he could not explain this discrepancy because he was not the business administrator in 2010.
Citing the testimony, the judges' ruling stated the city has had discussions with the Single Tax Office, which had been responsible in 2010 for collecting and remitting EIT revenue, and last week the city was still awaiting a response regarding what the ruling termed the "missing 2010 tax receipts."
However, Scranton Tax Collector Bill Courtright, who oversees the Single Tax Office, and Maria Costanzo, an auditor in that office, said they were dumbfounded when they learned of the judges' characterization that funds apparently were missing based on Mr. McGowan's testimony.
"I don't know what they're talking about. We sent the money in 2010," Mr. Courtright said.
Regarding the ruling stating "the city inexplicably failed to receive any nonresident earned income taxes in 2010," Ms. Costanzo said, "That is completely false."
Rather, the Single Tax Office remitted six separate checks of varying amounts to the city in 2010 between April 19 and Dec. 30 of that year that totaled $601,463 of this particular EIT category. Ms. Costanzo produced the check numbers and their disbursement dates.
Searching those check numbers, Mr. McGowan on Thursday determined that this EIT money had been erroneously deposited in 2010 into a delinquent EIT wage account, instead of a general EIT account where it should have gone, and on which he based his testimony.
"It was recorded. It just wasn't recorded in the correct account," Mr. McGowan said. "It's not like we didn't get it."
Mr. McGowan also noted that the EIT error apparently had been missed in the city's 2010 independent audit.
The discrepancy mirrors the tenor of the commuter tax hearings, during which opponents argued the city's budget and financial figures were unreliable and the panel of judges expressed confusion with some of the numbers and explanations presented by city witnesses. The city's estimate of how much a 1 percent commuter tax would raise in a year also changed at the last minute.
Regarding nonresident earned income taxes, the way the system works is that the city currently collects a 1 percent EIT from all individuals who work in the city but live elsewhere. If the nonresident lives in a municipality that assesses a wage tax, the 1 percent that is collected by the city is remitted to the nonresident's home municipality. This accounts for most of the earned income taxes collected. However, if the nonresident worker's home community does not impose a wage tax, the city gets to keep that wage tax.
It is this category of earned income tax, known as 888 tax revenue, that was in question.
Ms. Costanzo also disputed Mr. McGowan's testimony that there had been discussions between the city and Single Tax Office regarding getting figures for this category of EIT to provide to the judges.
Mr. McGowan declined to respond to that assertion by Ms. Costanzo.
The city's petition actually was seeking an increase in the EIT, from 1 percent to 2 percent, so the extra 1 percent, a so-called commuter tax, would have been kept by the city. The judges rejected the petition because they determined the city failed to pass certain required hurdles to be able to impose a commuter tax, and because the tax would have gone beyond a legal threshold of merely balancing next year's budget by creating a surplus.
Contact the writer: jlockwood@timesshamrock.com