By Jeff Gallatin
North Olmsted officials are sending a message to the Ohio legislature that they think the potential ramifications of revamping municipal income tax collection have too high a price for cities.
City Council approved 5-0 at its April 2 meeting a resolution strongly opposing the passage of Ohio House Bill 5 by the Ohio General Assembly. The bill currently proposes more uniform methods of collecting municipal income taxes. It would have the state play a more prominent role in the collections and decrease the role of cities and agencies like the Regional Income Tax Agency (RITA), which collects the municipal income taxes for many northern Ohio cities, including most Westshore municipalities.
Proponents of the bill, like the Ohio Society of CPAs and the Ohio Chamber of Commerce, have said it will simplify how businesses collect taxes from their workers and then send them to whichever agency or governmental entity is collecting them for each city. Opponents of the bill, such as many municipal officials throughout the state, have said throughout the bill’s progress through the Ohio legislature that it will decrease the amount of revenue available to city and local governments. They have said it would be a crippling blow on top of the state’s eliminating the estate tax and reducing funding to the Local Government Fund for local governments in the state.
Mayor Kevin Kennedy sponsored the resolution along with Paul Barker, chairman of council’s Finance Committee.
Although Kennedy was not at the meeting, Barker said after the meeting North Olmsted officials, like many other municipal officials around the state, have been watching House Bill 5 closely.
“It’s something that is concerning a lot of cities,” he said. “Carrie (Copfer, North Olmsted’s finance director) has been keeping an eye on it and how it could affect the city. I think we’ve done a good job of weathering the storm in a bad economy the last few years, by making cuts where we could and trying to be good fiscal managers.
“But we’ve taken some hits like every other city when they (the state) cut the estate tax and reduced local government funding. Now they’re talking about changes that would reduce income tax collection money for cities, and that wouldn’t be good for us at all. We’re letting them know it just wouldn’t be good for us and (other) cities.”
As House Bill 5 currently stands, figures provided by RITA to its cities show North Olmsted could lose approximately $300,000 annually. Municipal officials said if the state assumes a more centralized role in the collection process, it will collect a fee or collection cost and/or take some of the money that would otherwise would go to cities.
“Losing several hundred thousand would be a big hit for us or any city right now,” Barker said.
Ward 4 Councilman Larry Orlowski said during council’s caucus session that it’s good for North Olmsted to formally come out against the proposed bill, noting that many other cities have passed legislation opposing it.
During the regular council meeting, Orlowski made additional remarks supporting the resolution.
“I believe the finance director has selected a well-crafted resolution opposing particular tenets of the current House Bill 5, which will create problems for all municipalities in the state of Ohio,” he said. “These problems occur when you have one-party domination of the house, senate and governor’s office, with entirely too much input from the (different chamber of commerce throughout the state).”
Orlowski said he realizes the chambers are doing their job by representing business, but said too much influence from any one organization is not good.