Springfield staff recommend 0.1% payroll tax and W-2 wage definition; council OKs sending measure to public hearing

City Finance Director Nathan Bell presented a payroll‑tax proposal that would charge 0.1% of wages paid, split evenly between employers and employees, and use federal W‑2 box‑1 wages with box‑12 deferred‑compensation added back as a definitional basis.

Bell said the proposal follows recommendations from the mayor’s fiscal stability task force and is designed to generate roughly $2.3 million annually. He told council the 0.1% rate (0.001) would produce up to about $2.45 million in a full first year under optimistic assumptions, but cautioned that first‑year receipts are likely to be lower and implementation timing (operations, outreach, payroll‑processor programming) will compress the first‑year collection window.

The city’s proposed five‑year forecast shows a roughly $800,000 general‑fund shortfall in the FY27 baseline without a payroll tax. With two quarters of payroll‑tax collections assumed in FY27, the model shows a small surplus in FY27–28 before deficits reappear in FY29–31 as costs (deferred maintenance, personnel, new fire governance)…