RITA Tax Battle Takes Center Stage Again
The battle over the administration of Euclid’s Tax Department has returned to City Hall.
After a contentions campaign, this past November voters rejected the idea of turning over Euclid’s Tax Collection responsibilities to the Regional Income Tax Authority (RITA). With the victory of a citizen-led campaign to defeat the RITA effort, in spite of its 5-4 approval by City Council and the support of Mayor Kristen Holzheimer Gail, the City still needed to modernize its Tax Department.
Euclid’s Finance Director James Smith and Mayor Gail asked Tax Administrator Nick Caplick to put together a plan for the department. The plan needed to address three key issues: Staffing, technology and access to data – including Federal Tax Information. After researching several options it was determined that the available technology and data solutions were inferior.
Mr. Caplick then explored a possible partnership with RITA that would modify the approach previously rejected by Euclid voters. “We really couldn’t update our technology on our own,” said Caplick at the second of two recent Zoom-style Executive & Finance Committee meetings. Caplick went on to explain the advantages of working with RITA and that he believes it is in the best interest of the City and its residents.
“This partnership will be a good thing for the City of Euclid. Residents really won’t see any difference (in service). We just want to use the technology that RITA has. They (RITA) have the ability to do this more efficiently than we (Euclid) can,” added Caplick.
At one point, Director Smith provided a cost comparison between City of Euclid cost to collect taxes and RITA. His comparison showed RITA saving the City money. Another reason to partner with RITA, according to several speakers, is the collection of taxes due to the City that are otherwise not collected due to inferior technology, a lack of needed data, and too few resources.
Both Mayor Gail and Caplick fielded a number of questions from Council members, with many wondering what the difference was between the rejected deal of November and the current recommendation. While the difference were detailed, including some guarantees regarding employment levels within the department that allows for local service consistent with current service levels, the potential switch to a RITA-City of Euclid Tax department partnership is not without controversy.
While the referendum vote in November rejected the idea of RITA’s involvement with income tax collection in Euclid, City Council has the power to effectively over-rule the vote. This potential for change will certainly be controversial as one of Euclid’s newest Council members was an organizer of the referendum opposing RITA.
Ward 3 Councilman and past Mayoral candidate Marcus Epps asked multiple questions during the discussion, pushing particularly hard on staffing level guarantees. When public comments were taken, one of the first emails read was from Jeff Beck, another organizer of the referendum opposing RITA. Beck’s tersely worded message called considering RITA a “slap in the face” of the voters and warned council members that “negating our vote will end your political career.”
Throughout the discussion, Mayor Gail focused on the potential to collect more taxes and generate more revenue for the City - which a more technologically-advanced RITA partnership can offer. “(A RITA partnership) will enable us to collect the tax dollars our city deserves.”
One issue that has gone largely undiscussed throughout the RITA controversy is the ambiguous and currently in dispute cost sharing calculation of income tax due to Euclid City Schools. This potential flaw in allocation dates back to the inception of the 0.85% shared income tax between the City and the schools and specifically how the credit for tax paid to another city is “shared” between the City and schools.
Gail promised that any consideration of RITA would go through a thorough public hearing and is trying to arrange for a public forum discussion of the topic, in spite of the constraints of the COVID-19 environment. “We’re not trying to do it quickly. We’re trying to do it right.”
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