Work from home poses threat to big city budgets

As the reality dawns that things will never again be exactly as they were before the pandemic, cities in Ohio face a major threat all their own: A permanent shift to more working at home could shatter the fiscal model on which they have relied for decades.

State lawmakers have postponed the reckoning with a temporary law leaving matters essentially unchanged, but the issue will have to be addressed, probably sooner than later. A resolution potentially could negate the bargain that long has existed between major Ohio cities and their suburban neighbors: Big cities provide the infrastructure and amenities that support major employers, and the cities in turn collect income taxes from people who work for those employers, regardless of where the workers live.

Suburban communities collect income taxes from those who work inside their borders. It generally is enough to support their operations. Columbus, with a much more-complex infrastructure and a greater need for social services, would struggle greatly without the revenues from those who commute in.

The problem is that, if not for the temporary measure passed in March (it remains in effect until 30 days after the statewide COVID emergency is declared over), all of us whose employers are in Columbus but who are working from home someplace outside Columbus technically wouldn’t owe Columbus income tax for most of the past four months.

Given that many of Columbus’ highest earners live outside city boundaries, the loss could be devastating.

The issue is especially acute here because Ohio cities live off of the income tax to a much greater degree than those in most states. Columbus gets three-fourths of its general-fund revenue from the income tax — a statistic that makes it, according to the Brookings Institute, the U.S. city most vulnerable to financial fallout from coronavirus.

Ohio school districts, on the other hand, are overly reliant on property taxes — a circumstance that infamously has led to gross inequity.

Perhaps this all points to the need for a top-to-bottom overhaul of taxation in Ohio, but that seems unlikely — and if it did happen, the current tax-loathing legislature likely would leave Ohio with public services even poorer and less equitable than they are now.

Some may welcome a shift, especially if where they live has a lower tax rate than where they work. But the starving of big cities would come at a high cost.

As with so many other ill effects of the pandemic, a tax shift would fall hardest on poor and minority communities — those who rely most on the city services whose funding would be slashed.

Pandemic-induced social changes could hurt cities beyond the tax ledger, too. Columbus, like many other cities, has experienced a vibrant renewal in the past decade or two with a boom in Downtown development. Now, the very things that have attracted people to urban living — density, night life, busy public spaces — have become dangerous.

Working from home is great for some, and the past four months have shown that it works for many companies. But it has a human cost in the lost collaboration, mutual inspiration and simple camaraderie that aren’t the same over Zoom.

Here’s hoping for rapid development of a vaccine, or at least advances in treatment, so the specter of COVID-19 becomes less fearsome and people can gather again for work or play without extra worry, and without busting city budgets.