SPRINGFIELD – The discussion around a payroll tax is still in the talks at Springfield city council meetings. At Tuesday night’s meeting, finance director Nathan Bell requested council feedback on the proposed payroll tax ordinance and proposed amendments to the Springfield city code.
The Mayor’s Fiscal Stability Task Force recommended a shared employer-employee payroll tax to generate approximately $2.3 million to support the General Fund. Part of the purpose of the meeting was to define key terms in the Municipal Code, like employer, employee, fixed rate, tax administrator, and wages.
More code amendments included establishing a one-tenth of one percent payroll tax on wages paid by employers with a physical presence in Springfield and wages earned by employees working for Springfield-based employers. The 0.1% tax is being used as a placeholder for now until the final rate is decided on by the council at an April 6 city council meeting.
Bell asked the council for approval on delegating administrative rulemaking authority to City Manager Nancy Newton, which is fairly common, according to Bell.
“If you’re an employer implementing and administering this program in your organization, you’re not going to be looking to our ordinance or code. You’re going to be looking at our administrative rules,” Bell said.
A look at the administrative rules includes more detailed definitions, tax obligations, reporting, audits, penalties, waivers, appeals, and enforcement.
Bell also talked about the proposed “guardrails” that come with the payroll tax. A goal for the council with this project is about providing transparency to the public, so one guardrail the Bell suggested is keeping revenues from the payroll tax budget in a separate fund for folks to see.
Other guardrails include no rate increases or structural changes for three years after implementation, required annual reporting to the council and public, and a formal program review after three years.
The council crew discussed some challenges that come with budgeting the city for a year. City manager Nancy Newton pointed out that all it takes is one large event, like a global pandemic, ice storm, or Holiday Farm fire, to have a budgetary impact.
“I think you should propose a budget that makes the most sense, evaluating everything,” said Mayor Sean VanGordon. “If you come back and say the best reductions look like $200,000 from one bucket and $300,000 from a different bucket, whether or not that includes the library, I don’t feel like you should be bound by exactly what the report says. Give yourself as much flexibility as possible to evaluate all the services that we have to close the budget that makes the most sense for the most amount of people.”
April 6 meetings will include a revised ordinance with examples of various payroll tax amounts for the council to see, a public hearing, and first reading. On April 20, a regular session will be held for the second and final reading.
