Cities object, businesses applaud as sweeping local tax changes clear Ohio Senate

Government And Institutions Associated Press

A sweeping overhaul of Ohio's municipal tax system cleared the state Senate on Wednesday, with lawmakers divided over whether the reform legislation would ultimately help or hurt the state.

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The bill is the result of years of debate. It is intended to make tax filing easier for Ohio businesses across hundreds of cities, villages, counties and school districts.

During floor debate, some Democrats said it will instead saddle already struggling municipalities with additional burdens, while supporters argued the uniformity brought by the bill will allow businesses to know what to expect and bring economic growth.

The bill passed 23-8 with Republican state Sen. Peggy Lehner joining Democrats in voting no. The former city councilwoman from Kettering said she made a promise not to support any more legislation that hurts Ohio's cities.

Earlier in the day, business groups praised the streamlining measure during its final Senate hearing, while cities lamented that portions of the bill will mean a big financial hit.

They are particularly concerned about a provision that allows businesses to use one year's operating losses to reduce their local tax burden for up to five years, saying it will take millions off their bottom lines.

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City of Columbus tax administrator Melinda Frank said her city will lose millions of dollars as a result of the changes, which would take effect in January 2016.

"So when you lose that much money and you also lose money from other sources, such as the estate tax, property tax and the local government fund, that all accumulates," she said. "And so it's that pile-on effect that translates into a drop in revenue, and that correlates to a drop in services."

Tom Zaino, a former state tax commissioner who backs the overhaul, said allowing companies to carry forward net operating losses in tax filings for five years is not a new concept; two-thirds of Ohio municipalities already allow it.

State Sen. Bill Coley, a Middletown Republican, said the place for those dollars is in the hands of job-creating corporations and small businesses, "not the back pocket of the city treasurer."

In a floor speech, Sen. Capri Cafaro, a Hubbard Democrat, said cities in her northeast Ohio district would be hurt by the tax changes.

"Make no mistake: Our cities, towns and villages are not looking for a handout. They want to be a partner in attracting business growth," she said.

The Senate Ways and Means Committee adopted dozens of other changes to the voluminous bill Tuesday night, including removing a provision that would have required employers to provide a list of employees to each city where its employee had worked for fewer than 20 days and eliminating a "throwback" clause involving the sharing of sales tax revenue that cities had said would devastate their budgets.

Chairman Bob Peterson said members of the Republican majority in the Ohio House have been involved in final negotiations on the measure. That means the House, which has already approved the bill, may concur with Senate changes on the long-sought measure without additional hearings.