City Schools ask district voters to renew 1 percent income tax

The Athens City School Board has placed a renewal of the existing 1 percent earned income tax on the primary ballot this May. This is the same as the current earned income tax that was approved by voters in 2006.

If passed, the renewal, like the previous levy, would have a four-year limitation, and would require another renewal in 2014.

Athens school district Supt. Carl Martin said Friday that the income tax will generate approximately $2.9 million per year, which accounts for 10 percent of the general operating budget of the school district. This is equal to a 5.73-mill property tax, according to documentation provided by Martin.

"It's a pretty major piece of income for us," he said. "Basically, we use it for our general operating expenses like personnel costs, fixed costs, utilities, those types of things."

If the renewal is passed, nothing would change, and residents of Athens would be giving the same amount in taxes to the district as they are now.

Martin pointed out that this isn't a regular income tax, but an earned income tax. This means that residents will pay the district tax only on "earned income," which is defined as wages, salaries, tips and net business income from self-employment.

Residents do not pay the tax on pensions, disability, unemployment, welfare, ordinary dividends and interest, alimony, capital gains, rental real-estate income if not from self-employment, annuities, etc. Corporations are exempt from paying the district income tax.

Martin's document stated that the district tax is collected by the state in the same manner as the state income tax: through employer withholding, individual quarterly estimated payments and annual returns.

The state distributes the money it collects to the district quarterly, Martin said.

Residents must also file a school district income tax with the state annually at the same time they file their state income tax, even if they owe no tax.

The district income tax, Martin said, is deductible on federal income tax returns as an itemized deduction on schedule A.

Four years ago, he said, the state passed a law that allowed for the new earned income tax option for school districts. Previously, the only income tax option for districts looking to place a levy to voters was just a standard income tax that didn't include all of those exceptions. When the new law was passed, he said, the district decided to put the levy to voters in 2006. This was the first time the district began receiving funds through a local income tax, he said.

"We thought OK, let's propose an income tax for a couple reasons," he said. "One is that people, in general, have said over the years that there should be a little blend of income tax and property tax to fund the schools, instead of being overly heavy on property tax."

The other reason, Martin said, was that it is an earned income tax and not the regular blanket tax.

Anybody who lives in the district, and receives a W-2, pays the tax, Martin said.

Three public forums have been scheduled to give community members the opportunity to discuss the renewal, Martin said. These meetings are April 7 at 6 p.m., April 14 at 11 a.m. and April 22 at 6 p.m., all to be held in the central office building at 25 S. Plains Road in The Plains.

The primary election this year is slated for May 4.