Ohio Senate biding its time on uniform city income taxes

Note from the Municipal Tax Reform Coalition: HB 5 is currently pending in the Senate. Senators need to hear from YOU on why it must pass. Don’t delay—contact your legislator today!

The Columbus Dispatch (April 7, 2014)

By Jim Siegel

As business advocates and municipalities continue to clash, the Ohio Senate is in no hurry to move on a controversial bill that seeks to bring uniformity to Ohio’s complex system of municipal income taxes.

A coalition of business groups has made House Bill 5 a top legislative priority, and House Republicans in mid-November passed the bill after many months of debate. But the bill has yet to have a hearing in the Senate.

“It’s had a lot of action behind the scenes,” said Senate President Keith Faber, R-Celina. “It is something we believe needs to have action on it, but we need to do it in a balanced way. We need to understand all the impacts.”

Business groups, including the Ohio Chamber of Commerce, say the bill is an overdue effort to simplify what some say is the nation’s most complex system of municipal income taxes. Businesses that do work in multiple cities, they argue, are often overburdened with tax administration, sometimes to pay meager tax amounts.

But city officials, including several across Franklin County, say the bill includes tax-cutting provisions that will mean more revenue losses on top of the state cuts and other tax losses they’ve already endured.

“This is not an easy bill,” said Sen. Bob Peterson, R-Sabina, a lead member working behind the scenes.

There is agreement, he said, that uniformity is important to making it easier for businesses to operate and for attracting new businesses. “The challenge is balancing the very real concerns of municipalities.”

City officials say they have about a half-dozen problems with the bill, none larger than a requirement that cities allow a five-year net operating loss to carry forward. Supporters have called it good tax policy, but about 200 cities, including Columbus, do not allow businesses to spread losses from a single year to reduce future tax liabilities, fearing significant revenue reductions.

“People gathered the best information they could in the House, but I think some of the information was not completely accurate,” Peterson said, adding that the Senate is getting better information on the impact on cities. He would not elaborate.

Kent Scarrett of the Ohio Municipal League called a meeting last month involving cities, business interests and Sen. Chris Widener, R-Springfield, “very positive.” It’s good that senators want to be deliberative, he said, but there is worry if they wait to the post-election lame-duck session to pass the bill.

“We’re concerned that lame duck may be a rushed exercise in trying to digest what is in (the bill),” he said.

Dan Navin of the Ohio Chamber of Commerce said he remains confident a bill will pass, and the objective now is to get hearings started in May, before lawmakers take a five-month break.

“We have to get the senators up to speed on what the issues are,” he said.

But Sen. Scott Oelslager, R-Canton, chairman of the Senate Finance Committee, said he does not anticipate May hearings unless Faber indicates otherwise. Oelslager said he has no timetable except to get the legislation passed by the end of the year.

Tom Zaino, a former state tax commissioner who is representing the coalition of business groups pushing the bill, said it has been telling senators what is really in the bill. “There is a tremendous amount of misinformation,” he said.

“Some of the provisions that came out of the House also create problems for cities. The question is if there’s a middle ground or not. I’m not certain there is because it’s all about good tax policy.”