Hudson -- Income tax revenue for the city could increase by 7 percent this year, much higher than the conservative 1.5 percent increase predicted during last year's budget talks.
Finance Director Jeff Knoblauch told Council Oct. 22 that actual income tax receipts from RITA, which the city receives twice a month, have shown a slow and steady growth with an increase of 7 percent in 2013.
In 2012 income tax receipts were $12.8 million and were expected to increase to $13 million in 2013, but the city is now anticipating an extra $700,000. But Knoblauch cautioned receipts can go up and down from one month to the next.
The actual income tax collected in 2013 would be used when calculating future income tax revenue.
He recommended recalibrating the expected increase in income tax receipts over the next 5 years from 1.5 percent to 2 percent in the five-year budget, but some Council members wanted a more accurate number to represent the increase and yet remain conservative in the long-term view.
Council President David Basil suggested forecasting a 3 percent increase for 2014, 2.5 percent increase in 2015 and 2 percent increase for 2016 through 2018 for the five-year forecast. He also wanted to look at revenue in June to compare actual with projected amounts.
Knoblauch said if there was extra revenue in June, they could add it to projects such as roads.
Income tax revenues were high in 2007 at $13.36 million and then dropped in 2009 to $12.12 million. If 2013 keeps on track, it will be the highest amount for income tax collection for the city ever, Knoblauch said.
The increase in income tax receipts can be attributed to two factors -- there are more businesses in Hudson with 26 zoning certificates issued for new businesses in 2012 and 15 issued so far in 2013, Knoblauch said. And businesses are paying more in taxes, but at this point, Knoblauch said he can't determine if its because they have increased the number of employees or increased the amount an employer is paying employees.
"The more the wages generated at a business, the more income we will receive," Knoblauch said. "If an employee gets a 5 percent increase, we should receive an increase of 5 percent from that company."
Knoblauch used the workshop to state the assumptions for the budget process next month. He will make the changes to reflect the higher percent increases for income tax receipts -- 3 percent increase for 2014, 2.5 percent increase in 2015 and 2 percent increase for 2016 through 2018 -- in the five-year budget.
Discussions on the five-year budget are scheduled for Nov. 7 and Nov. 19 from 6 to 9 p.m. at Town Hall.
Facebook: Laura Freeman, Record Publishing