City officials oppose tax collection plan

DAVE MOSIER/independent editor

Concerns over state legislation that could take a big bite out of municipal income tax collections generated a lot of conversation by members of Van Wert City Council during their meeting Monday evening.

City Auditor Martha Balyeat noted that the legislation, which would result in the state taking over collection of municipal income tax revenues, has several Ohio communities worried for several reasons, including the possibility the Ohio General Assembly would then seek a uniform tax rate.

Balyeat said a uniform tax rate would likely hurt Van Wert, since the rate selected would likely be below the 1.72 percent currently collected by the city — and could be possibly as low as 1 percent.

“It would be a huge, huge loss for us,” the auditor said of a uniform tax rate lower than the city’s current rate.

Balyeat said the state would also levy a fee on municipalities of 2.5 percent of collections – which is substantially higher than the cost of operating the local income tax office.

“You are going to end up paying the state for less service,” she said, explaining that the local income tax office also provides Van Wert residents with tax filing assistance and other helpful services.

Balyeat said the reason behind the centralized tax collection system is mostly to make Ohio more attractive to businesses looking at the state as a site for new development. The auditor said those who support the idea of centralized municipal tax collections feel the current system of municipal income tax collection, as well as widely varying municipal tax rates, is not “business friendly”.

“That’s their big complaint,” she noted.

Balyeat said the proposal is being spearheaded by the Ohio CPA association, which sees the current system as unwieldy and costly to companies, which currently have to file separate tax returns for each municipality in which they do business. Ohio Governor John Kasich and Lt. Governor Mary Taylor have also said they support centralized income tax collection.

Several states, such as Indiana, already have centralized municipal income tax collection — something proponents of the idea say enhances a state’s ability to compete for new economic development.

The problem in Ohio is the higher fees the state would charge, in addition to the cash flow problems that would inevitably result if a centralized tax collection system was implemented.

Balyeat said the way income taxes are now collected allows the city to invest several million dollars each year. While investments haven’t resulted in a lot of additional revenues lately — mostly because of extremely low interest rates — the auditor said the city stands to reap substantial additional revenues when interest rates again increase.

With a centralized tax collection system, Balyeat added, the city also would likely see delays in receiving tax revenues collected.

“You may not see your money for up to six months from the time it was collected,” she noted. Those delays would not only affect investments, but could also create cash-flow problems for the city.

Councilman At-Large Councilman Dick Shultz, himself a CPA, was adamantly against centralized income tax collection.

“It’s a CPA-run thing because they want to be business friendly,” Shultz said. “I see that point, but this is killing municipalities.”

A committee-of-the-whole meeting was scheduled for Monday, October 10, to discuss adopting a resolution opposing centralized tax collections, something several other Ohio cities are in the process of doing.

Also Monday, City Council unanimously approved a resolution seeking reform of the federal Clean Water Act, which has created a financial burden for political subdivisions trying to fulfill EPA-related mandates, and also again discussed a proposal related to city trash collections.

Council members voted 6-0 to amend the pending trash collection ordinance to add tenants to those who could be cited for putting trash out too early. The ordinance currently would levy fines of up to $150 on those who put trash out before 2 p.m. on the day before trash is to be collected, although Fourth Ward Councilman Stan Agler said he feels maybe the city should look at a civil penalty rather than a criminal misdemeanor charge.

Council also introduced measures to limit parking on portions of three city streets: Burt, from Main to Bonnewitz; North Walnut, from the railroad tracks to Brooks Avenue; and Congress, from Shannon to the west side of High Street.

Council members also approved Mayor Louis Ehmer’s appointment of Mark Klausing as a member of the city Board of Zoning Appeals and prepared legislation to extend the amount of land owned by Cooper Farms’ Cooked Meats plant that would be protected by the Van Wert Fire Department.