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Posted: 9:20 p.m. Friday, Feb. 8, 2013

Kasich tax plan would bring millions to counties

Clark County administrator worries about loss of local control in new proposal.

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By Andrew J. Tobias

Columbus Bureau

Counties in the Miami Valley would receive at least $19.5 million in additional sales tax revenues next year under Ohio Gov. John Kasich’s budget plan, but some county leaders fear loss of local control.

The new revenue — which would work out to be $2.1 million for Clark County — is thanks to increased tax collections expected to result from applying the tax on services like haircuts, cable TV and legal services that had previously gone untaxed.

Under a state guarantee, backed up by the increased tax collections, counties would receive at least 10 percent growth in sales tax revenues in 2013, another 10 percent growth in 2014, and 15 percent in 2015.

But the broadening of the base would be accompanied by a mix of statewide and local cuts and a temporary moratorium on counties’ abilities to change their tax rates. Otherwise, the broadening of the sales tax would equate to a “massive tax increase,” Ohio Tax Commissioner Joe Testa said earlier this week.

All told, Clark County shoppers would receive the largest sales tax rate cut in the region, about 1.3 percent, according to a Springfield News-Sun analysis of information released this week by the Ohio Department of Taxation.

Clark County’s rate cut would include the forced expiration of a local temporary 1/2 percent sales tax that is currently on the books. County commissioners have considered renewing some or all of of that local tax before it expires on Dec. 31, but Kasich’s plan would prevent any counties from changing their sales tax rates for the next three years.

Clark County Administrator Nathan Kennedy said he and other county officials are closely monitoring the progress of Kasich’s tax plan.

Kennedy said he’s not happy about the prospect of a loss of local control.

“I have concerns about the state’s methodology,” Kennedy said.

But it appears that even if Clark County is forced to let the 1/2 percent local sales tax expire, it could still collect the spoils next year. That’s because of the state guarantee.

The state guarantees 10 percent growth next year based on tax collections in 2013. That means that Clark County would apparently keep the roughly $7 million the 1/2 percent tax would generate next year, plus 10 percent growth, even though Clark County shoppers wouldn’t be paying for it anymore.

Asked about that scenario, a spokesman for the Ohio Department of Taxation confirmed its apparent accuracy. But whether that comes to bear remains to be seen. Only a summary of Kasich’s plan has been publicly released so far.

Sales taxes are a key source — and often the largest source — of revenue for county governments across the state.

County commissioners statewide are encouraged by the prospect of additional funding, but concerned about the implications of other elements of the plan, including a loss of local control, said Larry Long, executive director of the County Commissioners Association of Ohio.

The new funding also would likely not make up for recent state cuts, Long said.

“Frankly, there’s more unanswered questions before we come to a definitive answer on this one,” Long said.

Kasich’s sales tax plan is part of his larger, ambitious budget plan, which also calls for an overhaul of Ohio’s school funding formula, an expansion of Medicaid, income tax cuts for all Ohioans and raising taxes on the oil and natural gas industry.

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