Councilwoman Jean Mope slammed city administrators for a lack of oversight after she received reports that a wage tax increase that was levied as part of Hazleton’s financial recovery plan showed up in check stubs for a longer period than what was approved by a Luzerne County judge.
The recovery plan calls for a 0.4 percent increase in the resident earned income tax, retroactive to July 1. But check stubs that were issued in advance of an upcoming payday show that the tax was levied at the higher rate as of Jan. 1 — resulting in lighter for some employees, she said.
The mistake shorted one employee’s check by $300, Mope said.
“The Grinch Stole Christmas this year for the City employees,” Mope said Wednesday in an email to the Standard-Speaker. “It is hard enough to have a 6-month bulk amount of EIT Taxes taken out of one paycheck and then to have the entire year … taken out of one paycheck is totally unacceptable especially right before Christmas.”
Mope said she doesn’t expect city workers to talk publicly about the mistake for fear of retribution.
Mayor Jeff Cusat said later Wednesday that the mistaken withholding rate showed up in pay stubs that were issued ahead of payday. The error affected 60 of the city’s 108 employees.
The mayor said he’s confident the city will resolve the issue before pay is deposited into employee accounts later this week.
“We did come up with a solution,” Cusat said. “We’re going to calculate the difference and make the payment back to the employee. It will be rectified prior to the actual payroll date, which I believe is Friday.”
The problem, Cusat said, is the amount of time that the higher rate was levied.
The higher tax rate is based on the city’s recovery plan, which hikes the resident EIT by 0.4 percent — or from 1.35 percent to 1.75 percent — to pay pensions.
The increased rate was supposed to be applied retroactive to July 1, but a “glitch” in accounting software mistakenly withheld the tax at a higher rate since Jan. 1.
The 0.4 percent wage tax increase would cost an employee an additional $4 for every $1,000 they earn over six months, Cusat said.
“When it was entered into our accounting software, it was backdated all the way until Jan. 1 — almost a full year — instead of July 1,” Cusat said. “The error is going to be $4 per $1,000 you made from Jan. 1 to June 30.”
Mope, however, asked how the administration could miss the mistake.
“The buck stops with the administration and the mayor’s desk,” she said. “Somebody should’ve double-checked. A lot of our people who work live paycheck to paycheck.”
Cusat said he received “a few calls” from city workers, including union representatives for the Department of Public Works. A union representative could not be reached for comment.
“Obviously, we’re sorry this happened,” Cusat said. “We are trying to take a proactive approach to correct new tax rates that were imposed through the court system during the Act 47 process.”
©2018 the Standard-Speaker (Hazleton, Pa.). Tribune Content Agency, LLC.
