Municipal Tax Uniformity: A Common Sense Approach

Municipal Tax Reform

Dublin City Council Opposes House Bill 5

Monday, November 18, 2013

Dublin City Council passed a resolution at their Monday, November 18 meeting opposing Substitute House Bill 5. The City of Dublin supports and applauds efforts to bring uniformity and simplicity to Ohio municipal tax law, but in a revenue-neutral matter.

The resolution is in response to passage of the bill by the Ohio House of Representatives on Wednesday, November 13. The bill is now expected to go to the Ohio Senate.

Substitute House Bill 5 will impact our ability to provide basic services. The municipal income tax is a vital source of revenue that enables the City of Dublin to provide essential municipal services and offer a quality of life that residents and businesses expect and demand. Any forced reduction in municipal tax revenue will have a negative impact on our community, creating an environment detrimental to retaining and attracting businesses to Dublin and to the State of Ohio.

This is the third hit city budgets have taken from state cutbacks in just three years. We have worked aggressively to “do more with less” as the state has cut back its support, but Substitute House Bill 5 pushes this too far. Along with other cities, we may have no choice but to seek tax increases. And tax increases are very difficult to pass.

Let your voices be heard. Contact your elected officials:

Rep. Michael Duffey | State Sen. Jim Hughes | Gov. John Kasich

 

Municipal Tax Reform

Ohio House of Representatives Passes House Bill 5

Wednesday, November 13, 2013

House Bill 5, designed to simplify Ohio’s municipal income-tax system, passed the House on Wednesday, November 13 over objections from city officials worried about revenue cuts. The bill passed 56-41. Rep. Mike Duffey serves the residents of Dublin.

Cities, and at least 41 representatives from both sides of the aisle, oppose the bill, largely because some provisions will lead to a loss of local tax revenue — on top of recent state cuts and the loss of the estate tax.

The bill is expected to go to the Senate. Sen. Jim Hughes serves the residents of Dublin.

In the meantime, Dublin City Council is expected to pass a resolution opposing House Bill 5 at its Monday, November 18 regularly scheduled meeting.

Let your voices be heard. Contact your elected officials:

Rep. Michael Duffey | State Sen. Jim Hughes | Gov. John Kasich

 

Oppose Substitute HB5

Background

Tuesday, November 12, 2013

Sub.HB 5 is a municipal tax bill co-sponsored by Ohio House Majority Whip Cheryl Grossman (R-Grove City) and Rep. Mike Henne (R-Vandalia). It was introduced to the Ohio General Assembly with the proposed purpose of promoting uniformity and simplicity within Ohio’s municipal income tax structure while maintaining a degree of revenue neutrality for all municipalities involved.

The City of Dublin, along with municipalities from throughout the State of Ohio, support and applaud efforts to bring uniformity and simplicity to Ohio municipal tax law, but in a revenue-neutral matter.

The bill as presented falls short of its claimed objectives. If passed, Sub. HB5 5would introduce legislation detrimental to the financial stability of Ohio’s municipalities.

The House Ways and Means Committee voted on November 6, 2013 to pass Sub. HB5 out of committee, over continued concerns from municipalities. Sub. HB5 substitute bill will now move to the House floor for a vote. The vote is scheduled for Wednesday, November 13 @ 1 p.m.

Click here for more information on where Sub. HB5 can go next on its path towards the Governor’s signature.

To keep current on this issue visit: www.ohmuniadvocates.com

Ohio United is an advocate branch currently opposing Sub. HB5, a bill that would drastically alter the way municipal taxes are collected in Ohio.

Read below. Learn more. Take action.

Here is what our residents need to know:

• We support and applaud efforts to bring uniformity and simplicity to Ohio municipal tax law, but in a revenue-neutral matter.
• We agree with The Columbus Dispatch (“Bumpy road for tax fix,” November 9, 2013) that “lawmakers should renew efforts to compromise” and not grant “certain businesses tax advantages that don’t currently exist.”
• As written today, Substitute House Bill 5 has carve outs and special considerations for individual corporations, granting them tax advantages – that don’t currently exist – so they don’t have to pay their fair share.
• Substitute House Bill 5 will impact our ability to provide the basic services our residents and businesses expect and demand. Businesses locate in the City of Dublin because we have well-maintained infrastructure, a proactive and responsive police department, and an attractive quality of life. We are able to maintain these services by being fiscally responsible with taxpayer dollars.
• Cities are responsible for the majority of economic development in the state. A key component of Dublin’s economic development attraction strategy is providing good city services, including well-maintained roads, sidewalks, parks and other basic amenities that contribute to a high quality of life for employees. Substitute House Bill 5 will negatively impact our ability to provide these services.
• This is the third hit city budgets have taken from state cutbacks in just three years. We have worked aggressively to “do more with less” as the state has cut back its support, but Substitute House Bill 5 pushes this too far. Along with other cities, we may have no choice but to seek tax increases. And tax increases are very difficult to pass.
• We worked with the writers of this bill for two years to come to consensus for a common sense, revenue-neutral solution. We were surprised and disappointed to find provisions added to the Substitute House Bill 5 that we cannot support.

 

Substitute House Bill 5 Will:

• Cost Dublin tax revenues each year. These are funds we would have used to maintain our roads and parks, and to ensure adequate police protection, for example.
• Put our bond rating at risk, which could potentially increase the cost of borrowing on capital improvement projects. The more interest being paid on debt issued by the City means fewer funds available for other projects and services.

 

Here’s How to Fix House Substitute Bill 5

• Consolidated Returns. Remove the provision that allows taxpayers to opt out of the requirement for filing a consolidated return after five years but not allowing the municipality the same right. This removes local control and also results in significant losses in tax revenue.
• Mandatory 5-year Net Operating Loss Carry-Forward. Remove this provision that allows businesses that lose money in one year to count that loss for up to five years, offsetting profits earned in those subsequent years.
• Mandatory Pass-Through Entity Loss Offset of Other Income. Close this unheard-of new loophole for special interest groups that would authorize a Dublin resident to use losses incurred in another municipality to reduce his tax liability in Dublin.
• Increase in Number of Days Casual Entrants Can Work without Tax Liability: Remove this provision. The current law is already uniform so there is no need to extend the number of days now that we have defined “a day” and “principle place of work”, which will reduce compliance costs for businesses.

Call to Action:

• By Wednesday, Nov. 13: Contact your representative in the Ohio House! Click here for the phone number, email address and Facebook account.
• After Wednesday, Nov. 13, contact your Ohio Senator. Click here for the phone number, email address and Facebook account.
• Write a letter to the editor. Click here to write your letter and send it to The Dispatch or Dublin Villager.
• Attend the Substitute House Bill 5 vote that is tentatively scheduled to occur Wednesday, Nov. 13, 1 p.m. at the Statehouse. Talk to your representatives in the Ohio House and Senate and let them know your concerns.
• Monitor and comment on the City of Dublin’s website and social media channels.
• Monitor www.ohmuniadvocates.com for more information.

In the News

OUR VIEW: SIMPLIFYING TAX FILING IN OHIO MAKES SENSE; TAXPAYER-FRIENDLY HOUSE BILL 5 OPTS FOR CLARITY OVER CONFUSION

Nordonia Hills Leader
There are almost 600 municipalities in Ohio levying local taxes, using about 300 different tax forms with varying deadlines, penalties and codes.
http://www.the-news-leader.com/opinion/2013/11/20/our-view-simplifying-tax-filing-in-ohio-makes-sense-taxpayer-friendly-house-bill-5-opts#.UozVWSSpaKA.email

Ohio House Oks municipal income tax bill opposed by cities

The Columbus Dispatch
A business-backed bill designed to simplify Ohio’s municipal income-tax system passed the House yesterday over objections from city officials worried about revenue cuts.
http://www.dispatch.com/content/stories/local/2013/11/13/ohio-house-approves-local-tax-changes.html

Municipal tax bill not clear-cut for central Ohio legislators

The Columbus Dispatch
With a potential vote this week, some legislators from Franklin County are struggling to decide whether to support a complex bill designed to simplify Ohio’s system of municipal income taxes.
http://www.dispatch.com/content/stories/local/2013/11/12/municipal-tax-bill-not-clear-cut-for-legislators.html

Changing municipal tax laws riles cities

The Columbus Dispatch
The Ohio House is set to approve sweeping business-backed changes in municipal income-tax rules this week, even though leaders of Ohio cities decry the bill as cutting further into their finances.
http://www.dispatch.com/content/stories/local/2013/11/11/changing-municipal-tax-law-riles-cities.html

Mishmash of city taxes hurts economy

The Columbus Dispatch
Ohio’s municipal-income tax system is like death by a thousand paper cuts for taxpayers. House Bill 5 will help to fix this barrier to economic development and make Ohio a better place to do business.
http://www.dispatch.com/content/stories/editorials/2013/11/08/1-mishmash-of-city-taxes-hurts-economy.html

Bill aimed at how cities collect income taxes gets makeover

The Columbus Dispatch
A bill designed to bring uniformity to Ohio’s complex system of municipal income taxes got a makeover that Ohio cities say is better but still reduces their revenue.
http://www.dispatch.com/content/stories/local/2013/10/23/Municipal-tax-reform.html

House Hill 5 vote ‘interesting’ one for leaders

This Week News
Bexley and other municipalities around the state could be affected by pending legislation that is designed to streamline Ohio’s complex system of municipal income taxes, District 18 state Rep. Michael Stinziano (D-Columbus) said during a Nov. 7 town hall meeting at the Bexley Public Library.
http://www.thisweeknews.com/content/stories/bexley/news/2013/11/11/district-18-town-hall-house-bill-5-vote-interesting-one-for-leaders.html

Thomas Suddes commentary: General Assembly chipping away at cities’ home rule

The Columbus Dispatch
Years will pass before raindrops wear down a rock. But they will, just as the General Assembly — both parties — slowly wears down Ohio cities’ home rule.
http://www.dispatch.com/content/stories/editorials/2013/10/27/1-general-assembly-chipping-away-at-cities-home-rule.html

 

Resources

Sample Letter Text

Dear Representative:

As Central Ohio community leaders, we are writing to express our strong opposition to Substitute HB5 in its present form. The original intent behind HB5 was to improve Ohio’s business climate by simplifying the state’s municipal income tax system. However, the substitute version of the bill contains a myriad of tax loopholes and exemptions that are designed to help select interest groups rather than the overall business community.

This is done at a great expense to our local governments. HB5, if enacted, will erode the major revenue source of Central Ohio’s local governments. HB5 will result in significant revenue loss and reduction in the city’s municipal income tax revenue. Although the needs of each municipality are slightly different, we believe that it is possible to create a bill that achieves uniformity.

As HB5 moves to the floor, we encourage you to speak with the Mid-Ohio Regional Planning Commission and Central Ohio government leaders to further discuss this bill.

We urge you to oppose HB5.

Letters from Others

Contact Your Ohio Senators