St. Marys City Council reluctantly terminated the services of its appointed Earned Income Tax (EIT) collector, St. Marys Tax Service, owned by Dave Farabaugh, due to a state mandate known as Act 32.
The state mandate, established in 2008, requires the restructuring of the Earned Income Tax Collection System for local governments and school districts. Entities were provided with a three-year window to complete the transition by January 2012.
The legislation is considered to be one of the most significant pieces of local tax legislation been enacted in recent years. The streamlining narrowed down the state's 560 tax collectors into 69 Tax Collection Districts, which is controlled by a Tax Collection Committee. In addition to Act 32 affecting all resident employees and all employers, it also affects self-employed individuals.
Central Tax Claim Bureau, based in Clarion, submitted the lowest bid for the position and is the city's new EIT collector.
Council approved Farabaugh's request for a letter from the city stating the termination of his services effective Jan. 1, 2012.
Farabaugh added that he will collect the fourth-quarter taxes for 2011; however, he will not be reviewing final returns for 2011.
The council approved Farabaugh's request with regret.
"Once again this is putting a local person out of business," said Councilman Bob Roberts. "This had nothing to do with local government. It's a state mandate and Act 32 made this nightmare that we're going to live to regret."
According to Greene, Farabaugh has been collecting the city's EIT for as long as he can remember.
"In spite of all the noise about returning more power to the municipalities, we continue to chip away at [it]," added Councilman Dick Dornisch.
Council also unanimously approved appointing Councilman Denny Nero to the vacancy on the Municipal Authority.
Nero was the only letter of interest submitted for the vacancy. He was appointed to the position by the Municipal Authority on Sept. 14, but Council needs to provide final approval in the matter. This unexpired term position is set to expire on Jan. 1, 2013.
Dornisch stated his disapproval in council members filling other office positions, but added that Nero's case was an exception since his term on council will expire in three months.