A year after public outrage sparked the repeal of Senate Bill 5, the Ohio legislature once again has its hands full with strong opposition to a proposed overhaul of the way Ohio cities collect taxes.
House Bill 601 — which is still in a House committee — would standardize how every city, town and village in Ohio collects and documents the revenue they raise from income taxes.
The proposed law has seen disapproval from local politicians and constituents, including Athens City Auditor Kathy Hecht and Councilman Jeff Risner, D-2nd Ward, who called the bill “ludicrous.”
Athens expects to lose up to $200,000 annually, Hecht said during the Nov. 13 Athens City Council meeting.
“The idea that we’re going to lose money the way (the bill) is drawn up right now is just scary,” Hecht said.
Ohio Sen. Lou Gentile, D-30th, said that many local legislative bodies in his district — including Athens City Council — are in the process of passing resolutions condemning the bill.
Gentile said he opposes the bill because it is a threat to self-rule in municipalities around the state.
“We have a diverse state,” he said. “We need some level of autonomy about how cities collect taxes and raise revenue.”
The extension of the “12-day rule” and the addition of the five-year net operating loss agreement are parts of the bill that could damage local government revenue the most, Gentile said.
The bill would add eight days to the “12-day rule,” which allows non-residential employees, such as construction workers, to withhold local income taxes.
The five-year net operating loss agreement would ease taxes on businesses that lose money for a five-year period.
Supporters of HB 601 say it would make auditing simpler for businesses and local governments, but Hecht said the length of the bill is proof that it will do the opposite.
“They took a less-than-40 page tax law and made it 130,” Hecht said. “Our local tax form is only a page or two.”
Co-sponsor Rep. Michael Henne, R-36th, said the current tax system needs to be revised because its stifles business in Ohio.
“It’s just a really complex and burdensome system for a lot of businesses,” Henne said. “(The bill) will really benefit the businesses that have to comply with all the different rules and regulations associated with the municipal income tax.”
The concerns of cities were taken into account when the bill was written, Henne said.
“We’re going to still let cities collect their own tax but we’re all going to play by the same rules,” Henne said. “There’s been a lot of compromise.”
Rep. Debbie Phillips, D-92nd, said even more compromise is needed before the bill is voted upon.
“The devil is always in the details when you have a bill like this,” Phillips said. “There needs to be a lot of open-ended and honest conversations about what the impact will be.”
But representatives may try to rush the bill into law early next year before those conversations can take place, Hecht said.
“Come January they’re really going to push it through,” she said. “It’s an odd circumstance because there’s not one tax administrator in the state who likes this.”
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