City officials Monday night proposed contracting with a governmental agency to collect the city's income tax.

City officials Monday night proposed contracting with a governmental agency to collect the city's income tax.

The move would eliminate three full-time positions and five part-time positions in the city income-tax office. It would keep the tax administrator and create a new position of income tax technician.

The proposal is to have the Regional Income Tax Agency (RITA) to collect the city's income tax. Representatives from a group of 162 cities govern RITA, which collects taxes for all of those member cities.

The proposal has not had a reading before council yet, but the measure would have to be approved by Sept. 1 for the city to sign up for tax year 2010.

Councilman Shane Ewald, chairman of the finance committee where the proposal was submitted, said he was not ready to have a first reading of the ordinance that would authorize the administration to contract with RITA. He said he wants to bring the measure back in two weeks for more discussion.

At the beginning of the presentation, Mayor Becky Stinchcomb spoke first. She said it is the job of the administration to look at how to maximize the service to the public.

"The city has a long history of working with other entities to maximize efficiency."

This is one of those situations, she said, but added that "for the first time in my memory, there are individuals involved" in the venture that would result in layoffs.

Angel Muma, deputy director of finance, estimated that the city in its first year of collections under RITA could collect an additional $379,000 to $3.7-million in income-tax revenues.

The sliding scale is based on collecting an additional 1 percent to an additional 6.1 percent, she said. Muma said the number comes from RITA cities reporting what they earned from one year to the next.

Councilman Tom Evers asked for details on the amounts by which tax collections increased or decreased in the first year for which RITA collected taxes from those cities.

Muma said she would obtain the data for the next committee meeting. She presented the idea to the council, reminding members that the city's income-tax collections had leveled off before the recent downturn in the economy. As Gahanna becomes a mature city, she said, fewer houses are being built and fewer businesses are moving in, resulting in flat tax revenues.

Those who live in the city pay taxes on their income but usually only a small portion of it. Most taxes are collected by the city in which the person works.

For example, those who live in Gahanna but work in Columbus pay 2 percent of their income to Columbus and only 0.25 percent to Gahanna.

Those who live and work in Gahanna pay 1.5 percent of their income to Gahanna.

The city's tax collections through June have decreased by 6.9 percent over the same time last year, Muma said.

Using RITA, however, would result in greater tax revenues, she said. The reason is that federal law prohibits the Internal Revenue Service from sharing its tax reports with cities whose populations are less than 250,000. RITA officials and city members lobbied Congress and obtained an exception to allow governmental institutions that represent more than 250,000, such as RITA, to have access to those reports, Muma said.

Finance director Jerry Isler said that when he first suggested that council consider increasing the city's 1.5-percent income tax, he thought this would be "the first step in whatever results."

Many of the employees who would be affected by the change attended the meeting. They did not speak, as the rules for committee hearings allow only council members and those presenting to speak.

They and their union representative, however, gave council a list of potential problems.

Council asked the presenters, including two employees of RITA, about many objections, including how many cities had left the organization.

Rick Carbone, RITA director, said a few cities have left the organization for a variety of reasons, including politics.

Other Franklin County municipalities that use RITA are Bexley, Grandview Heights, Grove City, Hilliard, Lithopolis, Lockbourne, Minerva Park, New Albany, Reynoldsburg, Upper Arlington, Urbancrest and Worthington, according to RITA's Web site.