Recently, legislation was introduced in the Ohio House of Representatives that would dramatically change Ohio’s municipal income tax provisions. Of greatest concern are recommendations that would cost municipalities millions in lost revenues and local control.
“Local mayors have been very supportive of efforts to create a more uniform and taxpayer friendly process. However, this seems to be more of an effort to take away local government’s ability to collect revenues necessary to run our cities. The real impact is disguised under the cloak of uniformity,” said South Euclid Mayor Georgine Welo, President of the Cuyahoga County Mayors and City Managers Association.
House Bill 5 is sponsored by Representative Cheryl Grossman (R – Grove City). The legislation contains several provisions that would erode the municipal income tax base. Among other provisions, HB 5 would create a mandatory 5 year Net Operating Loss provision for all municipalities across the state. This will adversely impact 238 cities throughout Ohio and cost Regional Income Tax Agencies (RITA) communities $3 million alone. Cleveland’s Central Collection Agency (CCA) estimates that implementation of the administrative changes would cost $6 million to its member communities.
“HB 5 would have serious consequences for Cleveland and cities throughout Ohio. It seeks to limit local control over taxation, reduce our revenue and increase our administrative costs,” said Cleveland Mayor Frank G. Jackson. “It will only compound the impact that recent revenue cuts mandated by the State have had on our communities.”
HB 5 would limit cities’ ability to tax certain business activities, redefine residency issues and centralize administrative activities. “The notion that ‘one size fits all’ as uniformity defies common sense. The proposed Tax Policy Board Takes away the authority and wisdom of locally elected city councils, violating the very essence of home rule provision which has guided and served local communities for over 200 years,” said Mike Summers, Mayor of Lakewood and Vice- Chair of the Northeast Ohio First Suburbs Consortium. RITA and CCA are conducting analysis of the total impact. A preliminary RITA analysis of
impact in west side communities alone total more than $3 million excluding any loss from NOL losses.
“In the past few years, municipalities have lost more than $500 million through a 50% reduction in the Local Government Fund and the elimination of the estate tax. We cannot continue to provide vital local services with all these hits to revenue”, said Willoughby Mayor David Anderson.
The mayors have been participating in interested party discussions in Columbus for the last year and have agreed to support certain uniformity provisions. “We are committed to continue to work to find common ground but will oppose efforts that will hurt our communities. Further state cuts will mean that our residents and communities will suffer,” said Bay Village Mayor Deborah Sutherland.
The Cuyahoga County Mayors and City Managers Association today passed a resolution in opposition of HB 5.
The Cuyahoga County and Northeast Ohio Mayors and City Managers Associations along with the Northeast Ohio First Suburbs Consortium represent over 100 communities and 2.5 million onstituents in ten counties.
HB 5 would have serious consequences for Cleveland and cities throughout Ohio. It seeks to limit local control over taxation, reduce our revenue and increase our administrative costs,” said Cleveland Mayor Frank G. Jackson. “It will only compound the impact that recent revenue cuts mandated by the State have had on our communities.