City opposes state tax collection plan

City officials are taking a stand against Gov. John Kasich’s tax collection plan.

The centralized tax collection plan is part of Kasich’s proposed biennial budget for fiscal years 2018 and 2019, which will allow the state to start collecting net profit taxes on behalf of Ohio municipalities.

Centralized municipal income tax collections would initially be for the net profit collections, but it is the Regional Income Tax Agency’s (RITA) and most municipalities belief that once the state gets their foot in the door with net profit collections, it will be easy for them to take over all the municipal income tax collections, Finance Director Andrew Unetic said.

“It is quite alarming for local municipalities,” City Manager Monica Irelan said. “It takes complete control of the income tax away from local governments.”

Painesville City Council passed a resolution March 20, strongly opposing the centralization of municipal income tax collections.

According to the resolution, centralized collections will cause a substantial loss of revenue needed to support the health, safety, welfare and economic development efforts of Ohio municipalities.

Irelan notes in the legislative report that centralized collection would also negatively affect the city in the following ways:

• Reduction of municipal income tax revenues, which are a major source of revenues for the General Fund

• City would only receive municipal income tax revenues on a quarterly versus a monthly basis

• It would eliminate the ability to track income tax revenues on a daily basis in order to make adjustments as a result of changing revenues

• It would eliminate or reduce the services provided to residents

• The State of Ohio does not have the ability to individually audit all the tax returns and the city would not have the ability to audit returns that might be understated

• The proposal is a clear attack on the Home Rule Powers granted to municipal corporations by the Ohio Constitution

This legislation will be forwarded to Kasich and the congressional staff.