Cities oppose state tax collection

St. Marys and Celina officials strongly oppose Gov. John Kasich's call for a centralized collection of municipal income taxes outlined in his proposed state budget.

Council members in both cities on Monday night acted on resolutions decrying the planned state takeover.

In Celina, council members suspended the three public-reading rules and unanimously passed a resolution based on a template drafted by the Ohio Municipal League.

The state proposal would erode home-rule powers and cause a substantial loss of revenue needed to support the health, safety, welfare and economic development efforts of municipalities, Celina's resolution states.

Mayor Jeff Hazel said a state takeover would adversely impact the $5.5 million the city collects each year from the aggregate 1.5 percent income tax. He did not, though, state exactly how much Celina would lose.

"(The state) would look at a 1 percent administration fee, but there's no cap to that," Hazel said.
Hazel said he was OK with Kasich's move a few years ago to cut local government funds by 50 percent because it helped the state regain its fiscal strength and balance its budget.
"We didn't fight and kick really hard like some communities did because we stayed very, very solvent. We stayed on very strong financial footing," he said.
But since the state's finances are better, he opposes a plan that would have negative impact on home rule "afforded to us by the Constitution of the state of Ohio," Hazel said.

"I think that's what we have all sworn to uphold and protect, and I think that we need to maintain that autonomy," Hazel said.

Council president Jason King agreed.

"In a republic, we're supposed to be self-governing at the local level and they're taking away our right to do that," he said. "This is more big government. This is not good for Celina; it's not good for small cities like us."

Under the state takeover, eliminating a category known as a "throwback," would "substantially reduce reportable tax revenue to municipalities with warehouses, distribution centers and any business providing online sales," the resolutions states.

Furthermore, only municipalities, the resolution states, "can ensure the prompt and proper auditing of local tax returns to ensure all applicable deductions and declarations are reported, thus also ensuring that all taxpayers pay their fair share without causing higher costs of compliance for all."

In St. Marys, councilors also gave first reading to a similar resolution opposing centralized collection.

"This council believes that the passage of this legislation will result in a loss of revenue as a centralized state office would not be familiar with local businesses and not be able to provide answers in a timely fashion in the same manner as the current St. Marys tax office," the resolutions states.

Kasich's proposal is intended to save businesses the extra cost of computing and filing net profit taxes with multiple municipalities, according to a state budget overview.  

"Despite significant progress in recent years to address the long-standing problems in Ohio's municipal tax system, it remains cumbersome and costly as businesses are forced to comply with hundreds of different local systems," the report states. "Ohio seeks to streamline the process by having businesses file just one form and a single payment online through the Ohio Business Gateway, with the Ohio Department of Taxation processing payments and distributing revenues back to the appropriate local government, just as it does for county sales taxes and school district income taxes."

- Daily Standard reporter Ed Gebert contributed to this report.