Oregon City Council unanimously passed a resolution opposing the state’s proposal to centralize municipal income tax collections and then charge a fee to administer the service.
“Any proposal to add the municipal income tax to the State of Ohio tax return could change collections based on employment to a tax based on residency, which could have a detrimental effect on revenue for the city,” states the resolution.
“The centralization of income tax collection by the Ohio Department of Taxation,” the resolution continued, “would eliminate local service to taxpayers and contradict the principles of local control and accountability and the right to Home Rule.”
Gov. John Kasich’s proposal, according to his administration, would lower costs, reduce staff, provide greater consistency and improve compliance with the tax code.
“We’re against it because it could evolve into a piggy back tax that’s based on residency so that people pay their payroll income tax based on where they live as opposed to where they work,” said Councilman James Seaman, who introduced the resolution at an Oct. 24 meeting. “If the state gets involved, that’s what could happen. There could be a lot of confusion about addresses and locations of companies. It’s very difficult for the state to keep a close eye on all the different contractors that work in our refineries and work in our power plants so that we are getting credit for that employment. The state will have the money and we don’t know how long they will hold it before they distribute it to us. We have monthly returns and, in some cases, quarterly returns. The state will take that money, make a float out of it, and do their investing with it. It’s a very, very sensitive issue.”
The state would also charge municipalities an administrative fee, possibly up to 1.5-percent, which would be higher than the administrative costs of local governments.
“The administrative fee exceeds what our tax department costs the city,” said Seaman. “That really makes no sense whatsoever. That 1.5-percent would be close to $250,000 that the state would want to charge us. You’re talking about a fee putting our people out of work. What it comes down to is another Columbus power grab. Create the employment in Columbus, the hell with the cities in the rest of the state. [Kasich] is liable to try and put it in the budget bill and get it passed that way because he can’t get it passed as a separate bill in the Legislature. This is very dangerous. Why doesn’t the state let the federal government collect the state income tax? They would never let that happen. We have home rule in this state, and Oregon is a home rule city with a home rule charter, so we have a right to make these laws for ourselves. It’s going to cheat the citizens of Oregon. There will be less equipment for the police and fire departments, less money for recreation. You can just go up and down the list. It will really work against the city. I’m very concerned.”
Councilman Sandy Bihn asked City Law Director Paul Goldberg if the state could overrule home rule and collect municipal income tax.
“The position of the state would be that this is a matter of state-wide concern over which the Legislature may rule. That’s just a matter for the Ohio Supreme Court, and it would be on the home rule issue,” said Goldberg. “They Ohio Supreme Court has a rather sketchy track record on home rule issues over the last 50 or 60 years. No one can predict how they are going to rule on any one case. They’ve gone both ways. So it’s hard to say.”
Bihn said she supported the resolution.
“In these times, we all need to remember that the public is very sensitive and concerned about costs,” said Bihn. “I was in Detroit, where the unemployment rate is a horrendous 42-percent. A lot of young people are having difficulty finding decent paying jobs with any benefits. So we need to be concerned in our government that we are as efficient and effective as we can be. Along these lines, through these processes, we can become more efficient in our own operations in the tax department. That would be a good thing.”