People who live and work in Greenville will be paying higher earned income taxes in 2007.

Mercer County Common Pleas Court Judge John Reed Wednesday granted the borough’s request to raise the earned income tax from 1.5 percent to 1.6 percent for residents and from 1.25 percent to 1.34 percent for nonresidents.

“I see nothing out of line and testimony supports the budget,” Reed said of his decision to allow the increase.

Because Greenville is a community designated as fiscally distressed by the state under Act 47, officials have the right to request higher-than- normal earned income tax rates, said borough solicitor Joe Joseph.

The state limit for the tax is generally 1 percent and the cash-strapped borough has had to get permission from the court the past several years to go higher than that during budget time. Greenville has been operating under the state’s debt recovery plan since 2002.

Borough Manager Ryan T. Eggleston testified the borough needs to raise earned income tax rates to balance the 2007 budget, which council adopted in November.

The borough is expected to have a surplus of about $300,000 at the end of 2006, but most of that money will likely go into the capital reserve fund, Eggleston said.

Mary Jane Kuffner Hirt, the borough’s new Act 47 coordinator, told Reed raising the tax rates should generate an extra $40,000 for Greenville.

She worked closely with Eggleston on preparing the budget and looked at every item to decide what could be cut and concluded they still needed to raise earned income tax rates.

One cut they made was custodial services for the borough building, which was expected to cost $5,000 for one year. During November’s budget meeting, council said borough building employees will be expected to help clean starting Jan. 1.

Council wanted to raise earned income tax rates to help cover an expected reduction in property tax revenue, an increased bond payment, a new firefighters contract, employee raises and higher utility bills.

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