MOUNT VERNON — Communication, planning, and attention to detail has been the key to the city of Mount Vernon’s financial stability. Although the city has seen a reduction in revenue, it continues to stay within budgeted appropriations each year.
Mount Vernon Mayor Richard Mavis and City Auditor Terry Scott discussed the income tax trends with the News as well as how the city maintains a strong financial outlook.
The city collects a 1.5 percent tax on income from people working inside the city limits and 0.5 percent for residents working outside the city. The amount generated from the 0.5 percent income tax on residents working outside the city totals approximately $100,000 a year.
The year 2008 was a banner year for the city.
“It was the most we ever collected in income taxes,” Mavis said.
The city’s income tax collection peaked during that year with $10,273,944. Income tax revenue for the next two years reflected the economic state of the country revealing a $827,143 decrease in 2009 and a continued decrease of $890,502 in 2010.
“Income tax for us drives everything we do except utilities,” said Mavis. “Utilities support themselves, and the money generated from income tax supports the fire, the police and the parks departments, as well as our office.”
Ten percent of this revenue goes toward capital improvements which has enabled the city to complete several big projects that included improvement to public roads that reduced congestion in high traffic areas.
“The city has not been hit as hard as other cities,” said Mavis, adding the city continues to maintain streets and parks as well as routine city repairs. “And our level of services really hasn’t changed very much, we haven’t had to lay people off. ”
Each year, the city very closely tracks its income tax revenue.
“In 2009 and 2010, we saw a reduction over the two year span of a little more than $1.7 million. That has had a financial impact on the city but we have been able to maintain services and keep things going,” said Scott, who analyzes the city’s revenue and expenditures on a monthly basis to make sure the city is operating within its budget.
Scott explained sources of income tax revenue come from corporate tax, partnership tax, resident tax and withholdings.
“What we have seen, and this has been very consistent in the two years of reduction, the single largest reduction came from the corporate business profits and they make up the largest sum of the $1.7 million,” he said.
In 2009, Scott said the city began to see the reduction very earlier on in the year. City officials were surprised to see the majority of the reduction did not stem from unemployment.
“The business side took the big hit and what appears to have happened, at least in 2009, businesses were willing to take a reduction in their business bottom line to keep people employed,” he said.
Despite the reduction in income tax revenue, Scott said the city budget should not see a reduction in services nor does he anticipate a problem in the work force for 2011. However, he has asked city departments to maintain a conservative attitude toward spending as he did in 2010.
“We completed some projects last year and we still have some projects scheduled for this year, so it’s not like everything has completely stopped. We are continuing to move forward at a financial pace that we are able to accommodate,” Scott said.