City officials urge resolution rejecting state income tax collection

Avon Lake/Avon

By Nicole Hennessy

City officials urged Avon Lake City Council to pass a resolution opposing a controversial income tax provision buried in the state’s 2017-2018 budget during Monday’s work session.

Several cities, including Lorain and Elyria, have adopted similar resolutions opposing state-mandated centralized collection of net-profit income taxes.

Steve Presley, Avon Lake’s finance director, who also sits on the board of Ohio’s Regional Income Tax Agency (RITA), summed up his, the board’s and city leaders’ opposition.

First, the state is proposing that it will charge municipalities a 1 percent administrative fee for its net-profit tax collection, a reduction from the RITA’s 1.4 percent.

Opponents argue that with no input or vote into these decisions, they will be led into a downward spiral of crippling financial policies, as well as a fear the state will eventually attempt to collect other municipal income taxes.

Plus, Presley warned, “One percent could quickly become 5 percent.”

Also, it is unclear how long the state will hold onto the funds before turning them back over to
cities.

Meanwhile, the state would be collecting any interest accrued from accounts the taxes are being held in.

“The difficulty is in the fact that this would be one area of tax collected by a different entity other than the Regional Income Tax Agency, of which we are a member,” said Presley.

“RITA, as it is known, collects all other income taxes on behalf of the city and remits to us twice a month those collections that they have received in the previous two-week period.”

This discussion comes just weeks after the cities of Avon and Avon Lake both joined about 30 other municipalities in a lawsuit in response to the State of Ohio’s adoption of Senate Bill 331 (SB331), which originally pertained to rules regarding Grove City, Ohio, pet stores. The Ohio Senate passed this
version of the bill in May. The House Finance Committee proceeded to add language to the bill
regarding things like animal fighting and prohibiting municipalities, counties or other entities to enact a minimum wage differing from that of the state.

The bill also now expands the right of communications providers to install “small cell facilities” (wireless infrastructure) in municipal rights of way, limiting the rights of municipalities to control the location, size and design of the structures.

In addition to imposing potentially unwanted small cell facilities on cities, Avon Lake law Director Abe Liberman indicated in that city’s action to join the lawsuit that SB331 also violates several provisions within the Ohio Constitution, including the single subject rule, which dictates that a bill can only include one subject, and municipal home rule authority, which opponents argue the state is also in violation of regarding its income tax collection plan.

For longtime Republicans like Avon Lake Councilman John Shondel, the continued violation of the Ohio Constitution by Columbus legislators paired with the state’s massive reduction to the Local
Government Fund – a 2011 move aimed at fixing an $8 billion state budget deficit – is difficult to ignore.

The Local Government funding has still not been restored to municipalities, which are now also
without the estate tax that the state eliminated.

These perceived home rule violations only add to the outrage felt by some.

Shondel says he places most of the blame for the SB331 on Republican leadership in both houses.

“That pains me to say that since I have always been a strong, registered Republican voter for 56 years,” he said.

“Kasich brags about his $8 billion surplus,”

Shondel added.

“Well, if you just don’t pay local governments, that ain’t that hard to do.”

Councilman Larry Meiners made similar comments Monday, expressing frustration with his party in regard to the income tax ordeal.

Mayor Greg Zilka chose his words carefully, expressing his own similar concerns.

“Let’s assume that all their intentions are noble and they’re doing this in the best interest of the residents in the state of Ohio,” he supposed, continuing that if another financial crisis were to arise, there is still no ability to rely on the Local Government funds.

“This is another opportunity for them to say they’re not taking any more money from us, but they’re going to hold onto it for six months or a year, as Mr. Presley stated,” Zilka continued.

“They would have access to those funds to help pay their bills at our expense. Their track record over the last several years has not indicated that they have a great deal of empathy for local governments trying to pay our bills, so the concern here is great.”

Contact Nicole Hennessy at nicohenness@gmail.com

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