Income Tax Collections Increase For 2012

ST. MARYS — The city of St. Marys finished 2012 with its highest income tax collections in four years.

Last year, the city collected $3.99 million in income taxes, which eclipsed the $3.74 million it hauled in during 2011. The $3.99 million also surpassed the $3.60 million it collected in 2009 and the $3.9 million it collected in 2010.

“I’m glad we are up,” St. Marys Mayor Pat McGowan told The Evening Leader. “That’s good, but our expenses have been up as far as operations and we are looking at those now.”

McGowan is in the process of reviewing the city’s financial situation. As part of that review process, McGowan is taking a closer look at the city’s major funds to determine if there are way to keep them from running on razor-thin margins.

“We are doing an analysis of the last five years to find out why the funds are going down,” McGowan said, noting the review will cover the General Fund as well as the Street Maintenance and Capital Improvement funds. “We want to take a look and see if there is anything we can do to manage those.”

During Monday night’s city council meeting, McGowan said the city’s General Fund has been in deficit spending for the past five years to the tune of approximately $1.3 million. Much of that has been taken from the city’s reserves — which helped plug any shortfalls.

“It isn’t because people are spending money frivolously,” McGowan said. “It’s because operating costs are just going up. It will take a lot of thought to figure this thing out.”

The General Fund derives revenue from a variety of sources, including the 1 percent income tax. Several recent factors have caused the city’s General Fund to take a hit.

“One of the things that has hurt us with that is that other cities have enact income taxes, and that lowers that fund,” McGowan said. “The state also has cut funding.”

Once the reports are compiled, McGowan said it is critical for city officials to make any changes that are necessary to keep the city’s finances healthy.

“We are running so close in those funds,” McGowan said. “We have been living out of our reserves and you can only live out of those for so long until it’s gone. The time to take corrective action is not four or five years down the road, the time is now and that’s why the citizens elected us.

“You don’t fall off the cliff and then try to climb back up. We need to address it now.”