The city of Springfield is opposing Gov. John Kasich’s plan to streamline municipal taxes for Ohio businesses, which could cost the city about $60,000 annually if approved.
Springfield city commissioners voted 4-1 last week in favor of a resolution opposing the proposal, which would allow businesses to file net profit taxes through the state, rather than local cities.
As part of the state’s budget proposal, the Ohio Business Gateway — a state-run website uses by businesses to access services and submit payments to certain state agencies — would collect municipal business taxes and then disperse it to municipalities.
The National Federation of Independent Businesses is backing the proposal, Ohio Legislative Director Chris Ferusso said. Centralized tax collection will cut back on the number of net profit filings businesses must make in different cities, he said. There are more than 600 cities and villages in Ohio, he said.
“We think it makes perfect sense,” Ferusso said. “It cuts down on compliance for our members, particularly those who work in multiple jurisdictions.”
Ohio business taxpayers would save $800 million in compliance costs, Ferusso said, more than the $600 million currently collected by cities and villages.
“That’s indicative of a broken system,” Ferusso said.
But the city of Springfield’s resolution says the state takeover is an attack on Ohio cities’ home rule authority. The state will charge a 1 percent fee for municipalities, which would cost Springfield about $60,000 annually, it says.
“They’re just taking a slice of our money,” Springfield City Commissioner Karen Duncan said.
Ohio businesses currently file taxes in every municipality where they earn income, often filling out forms in multiple cities and villages.
Springfield’s Income Tax Department currently collects municipal taxes from businesses. More than 250 other municipalities use the Regional Income Tax Authority, or RITA, to collect their municipal business taxes.
The Ohio House Finance Committee is expected to hold a hearing on the budget bill today.
The resolution was originally defeated 3-2 last month with City Commissioners Joyce Chilton and Kevin O’Neill both rejecting it. However, at last week’s meeting, O’Neill asked Mayor Warren Copeland to reconsider the motion for the resolution.
“I thought it was something that it wasn’t and I know what it is now,” O’Neill said.
Chilton again rejected the resolution because the old way the service was performed isn’t working, she said. The centralized tax collection could bring more businesses to the city and state, she said.
“I’m strictly looking at the fact that this is still being discussed and I’m not for sure if it’s even going to be an issue at this point,” Chilton said. “I’m sticking with the (no vote) because we need more businesses to bring in more revenue.”
“We don’t need to give Gov. Kasich another dime of our money at this juncture,” O’Neill said.
Springfield City Commissioner Dan Martin would believe differently about the issue if it created savings for either the city or residents, he said.
“I don’t see where it does either,” Martin said. “It just re-distributes funding that would normally come to the city to the state for doing the same service.”
The Ohio Municipal League believes local tax departments serve businesses better and more efficiently than the state, Executive Director Kent Scarrett told the House Finance Committee last week.
The Ohio Business Gateway also isn’t prepared to handle the amount of filings and redistribute more than the $600 million collected in municipal business tax revenues, he said.
“We have deep reservations that the system will be fully functional by Jan. 1,” Scarrett told lawmakers.
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BY THE NUMBERS
$60,000: Amount of money Springfield could lose if central business tax collection is approved.
$800 million: Money businesses spend to comply with Ohio’s municipal tax laws.
$600 million: Business taxes collected by Ohio municipalities annually.
The Springfield News-Sun provides continuous coverage of Springfield city government, including recent stories on more proposed development on Bechtle Avenue and upcoming financial forums.