Waynesville Village Council Tuesday voted to reduce the penalty levied against the Wayne Local Schools for not remitting income tax withholding payments as scheduled.
Council voted 4-2-1 to reduce the penalty from 50% to 15%, which was recently recommended by village Finance Director Kitty Crockett.
In her recommendation to council’s finance committee and to council, Crockett said she would reduce the penalty to 15%, which would total $3,693. However, the school district would be liable for the interest owed to the village.
Councilman Zack Gallagher abstained from the vote and discussion as his wife is a member of the Wayne Local Board of Education while Councilwomen Joette Dedden and Connie Miller voted against granting the penalty reduction.
From December 2019 and June 2022, the school district submitted late payments on employee income taxes to the Regional Income Tax Agency, which administer income tax laws for Waynesville and other governments across the state. According to village documents obtained by the Dayton Daily News, the school district owes about $27,075 to the cities of Waynesville, Xenia and Fairborn, for late payments of income tax that were withheld for employees.
Last month, former Wayne Local Schools Treasurer Ron James wrote a letter to the Regional Income Tax Agency that was copied to village officials seeking forgiveness on the penalties and interest. In the letter, James said he was “shocked” that the school district had any liability due. He also said he never received any notices of any issue from RITA concerning local income taxes and that his payroll person did not forward any notices to him. James left the district in late fall via a separation agreement with the district.
Interim School Treasurer Al Porter said 93% of the late penalties is owed to the village of Waynesville. He said the penalty fees totaled $24,621. He said the district leaders have instructed him to write the check for what is owed because the district can make an appeal after the taxes are paid. Porter also said the district has hired two new people to work in the treasurer’s office to ensure this does not happen again.
During the council meeting, Mayor Earl Isaacs made a motion to amend the ordinance to reduce the penalties to 0%, which was seconded by Councilman Brian Blankenship. However, during that discussion Dedden said, “I’m in total disagreement.”
Dedden said it would not be fair to the working class residents of the village to grant the abatement because the school district hadn’t paid its bills for several months. She then read from documents that listed the amounts of outstanding taxes, how much was paid and when it was paid -- some were several months late.
Miller opposed granting the tax reduction saying school district workers thought their taxes had been properly withheld and paid. “This will set a dangerous precedent,” she said.
Isaacs said he saw the situation as “hanging one man (former school treasurer Ron James) out to dry because of the school board.... He’s done so much for this village.”
Law Director Jeff Forbes reminded council that the only thing they were to consider was the reduction of the penalty, and not about the person or what the state auditor’s investigation might conclude.
Isaacs’ amendment failed.
Resident Chuck Dedden, husband of Councilwoman Joette Dedden, said he was angry when it was proposed to reduce the penalty from 50% to 15% and added it looked like the good old boys club was letting a friend off.
“Being irresponsible is why the penalty is there,” he said. “The penalties are still so people will pay their taxes on time.”
Dedden said council members won’t get his vote in the future if they pass this, adding they were doing a disservice to Waynesville.
Danny McCloud, an 18-year member of the school board, said the board came to the conclusion that the district did not know what bills had been paid or not paid.
McCloud assured council that the district is fiscally strong and that it fell into a bad situation with bills not getting paid on time. He asked council to forgive the school district and requested a 0% penalty.
After the meeting, Porter declined to comment about the decision and McCloud said he “appreciated” council’s decision to reduce the penalty and the district has hired new people for the treasurer’s office.
“I’m here for the taxpayers of Waynesville,” Joette Dedden said. “What’s fair for one taxpayer should be fair for all. In the long run, the school board was responsible.”
In addition to the late income tax withholding payments, the district is also trying to resolve four tax liens that the state has placed, according to Porter. The Auditor of State’s Office is also conducting a special audit of the district.