The fiscal officer in the Village of Genoa remains adamant in his opinion that a state proposal to collect local tax revenue violates the state’s constitution.
State officials began maneuvering in 2011 to allow the administration to centralize the handling of the nearly $4 billion in income taxes collected by local municipalities - a move that finance officers across the state contend would devastate the municipalities. They mounted a year-long attack against it.
The first bill aimed at putting the proposal into action died in session in 2012. But a new bill, House Bill 5, has been reintroduced recently in the legislature.
“Basically, they had meetings and listened to nobody and they did it their way. All the suggestions from the income tax people, from the local people have been ignored,” said fiscal officer Charles Brinkman. “The state wants to run the income tax fund for everybody. But to me it’s unconstitutional.”
Brinkman contends that state officials aren’t willing to wait until the economy gets better. Instead, he said, they’re taking the knee-jerk reaction to attempt to seize local municipality income tax funds to help the state out.
“They keep taking things away from us but still expect us to do the job,” Brinkman said of running a municipality’s finances.
He pointed to the loss of estate taxes, lower local government fund spending by the state and the tier-elimination of personal tangible property taxes as examples of major hits suffered by municipalities at the hands of the state.
The local government fund was chopped by 50 percent in the last state budget-balancing process. The result: local governments are facing reductions of about $633 million through June 2013.
“They want us to do more with less and less,” Brinkman said.
A proposal in the 2013 budget of Gov. John Kasich could affect taxing capabilities for municipalities in the near future, he said.
Meanwhile, Ottawa County is facing a decision on whether or not to renew a 0.25 percent sales tax enacted in July 2010, according to commissioner Jim Sass. Its renewal would, in effect, keep the county sales tax at 6.75 percent. That addition, which brought in nearly $3 million since going into effect, expires in September.
However, Kasich’s budget proposal would force municipalities to keep sales tax levels the same for the near future. Specifically, as of July 2013, they could not be changed for three years.
If the commissioners wade through all the formal hoops to enact the tax, including public hearings, the soonest the measure could take effect is July 1 – violating the state edict.
Brinkman said state officials should concentrate on fine tuning what it has in place before trying to reach out for local income tax funds.
He pointed to the transactions of the Ohio Business Gateway created to help streamline the relationship between businesses and government using online services.
“At least once a week they have trouble getting their money in some form or another,” Brinkman said. “If they are overloaded now, what is going to happen when they’re handling all the municipal tax monies especially during the high volume times such as July and December and the end of the quarters?”
The Ohio Municipal League has mounted a campaign against the centralization plan. Municipalities are skeptical the state can collect their income tax money better, affecting everything from distribution to fairness.
In an interview with the Associated Press, Kent Scarett, the league’s legislation representative, said his group is worried a centralized system could result in less revenue flowing to municipalities as well as less responsive tax administration.
Other details of the bill also concern Brinkman.
For instance, how are local officials supposed to remedy problems with individual tax complaints if the state has all the W-2 forms on file in Columbus offices? Brinkman asks, and state officials haven’t said what their share will be for administering the fund.
“You know they’re not going to do it for free,” Brinkman said.
“We want to make (the system) better. You can make the system better without taking it out of the hands of the local government. Things won’t be so business-friendly and the economy will be in the crapper,” Brinkman said.