Several businesses associated with the natural gas industry have been identified by city officials as not having paid occupancy permits, a first step in determining taxable entities.
It's a problem that points to a wider issue with which the city is dealing: managing the growth associated with the Marcellus Shale gas industry and keeping track of companies opening shop here, according to city officials.
"We've caught at least 10 companies in the last 30 days," said Joseph Gerardi, city codes administrator. "Ninety percent of them are in the natural gas industry.
Mayor Gabriel J. Campana said the issue has created a conundrum for the city: A need to remain business friendly while making sure companies are in compliance with permits and taxes.
"The city could be losing a sizable amount of money," he said. "The buck stops with me. I am the one who prepares budgets and must make sure enough money is coming in to pay for expenses."
However, he said, if there is a silver lining, the city continues to generate tax and permit revenue from new businesses that comply with the procedure.
Gerardi agrees with the mayor.
"We want to see the natural gas industry here, but when there are subcontractors and companies associated with the industry that aren't following procedure, we don't want that," Gerardi said. "I think a lot of the problem is the businesses don't know about the occupancy permit and tax requirements."
The city uses the occupancy permits, which cost $60, as a cross-reference for taxing purposes.
Codes works with Tom O'Connor, the city treasurer and tax collector, to ensure businesses pay their taxes.
"We take the (permits), scan them and send them to our tax collection agency, the Central Tax Bureau of Pennsylvania (Centax)," O'Connor said. Depending on the type of business, the city collects a business privilege or mercantile tax, he said.
The amount of taxes collected is no small matter, according to the 2010 figures at the city treasurer's office.
Last year, the city collected about $1.4 million in business privilege tax and $290,390 in mercantile tax, O'Connor said.
His office also collects the $52 assessed annually on each worker in the city for local services. That tax generated $1,035,632 in 2010, O'Connor said.
In comparison, in 2008, the city collected $1.1 million in business privilege taxes, $966,918 in local services taxes, while mercantile tax collections have declined since then, with $306,609 collected in 2008, O'Connor said.
"Should a company not report earned income tax or business taxes, the city can't find it for purposes of assessing the local services tax," he said.
Joseph Pawlak, city director of finance and budget, said uncollected taxes aren't solely related to natural gas businesses.
A percentage of the problem involves landlords who own property, rent those properties out and don't pay business privilege tax, he said.
The city isn't the only entity that may be losing out on tax revenue.
Williamsport Area School District also may be losing on earned income not reported, according to Jeff Richards, district business manager.
That could occur should businesses not report their employees and wages, he said.
"Businesses are obligated to report their number of employees and wages," Richards said.
Real estate taxes in the city are collected by the city treasurer, O'Connor said.
"The school district collects real estate taxes from the remaining townships within the school district," he said. "Earned income tax is collected by the school district Municipal Earned Income Tax office."
Jeanette Bower, of the school district Municipal Earned Income Tax office, said the school district can't levy earned income taxes on non-residents, such as gas workers living in other states and working here. But, the school district collects non-resident taxes for the city and other municipalities, she said.
Leadership at the Williamsport/Lycoming Chamber of Commerce have been alerted to the growing problem and doing their part to publish information and find a solution.
"With all the new companies and the pace that they have moved into the area, it is no wonder some problems have occurred," said Vincent Matteo, president and CEO of the Williamsport/Lycoming Chamber of Commerce. The problems are easily fixed with some outreach, Matteo said.
