CLEVELAND, Ohio – Cleveland City Council on Wednesday expressed its opposition to legislation before the Ohio Senate that could dramatically cut the city’s income tax revenues.
The resolution, signed by Mayor Frank Jackson shortly after council’s vote, is likely to carry little weight given that all 17 members of council and Jackson are Democrats and both the Ohio House and Senate are controlled by Republicans.
At issue is a bill introduced by Republican Sen. Kristina Roegner of Hudson would repeal a change made to state law that lets traditional employment centers such as Cleveland continue to collect taxes from former commuters who now work from home during the coronavirus pandemic era.
The change was part of a coronavirus relief bill Gov. Mike DeWine signed in late March. For cities such as Cleveland, it kept the bottom from falling out on tax collections that already were slumping from pandemic-related unemployment.
“We all appreciate how detrimental [this] would be for our city and for our budget,” Councilman Charles Slife said Wednesday. “It would lead to incredibly difficult decisions on cuts across all of our various departments.
“Our tax structure and the tax structure of many other cities are really built around the fact that we’re these large employment centers,” Slife said.
The change, sought by the Ohio Chamber of Commerce, meant that employers did not have to rework payroll withholding for all their employees during the pandemic.
Cleveland’s 2.5% income tax is its largest source of revenue. Coming into 2020, it was expected to generate more than $444 million.
Nearly 85% of the income taxes are collected from paycheck withholding, and about 85% of those workers are commuters.
Roegner’s proposal, Senate Bill 352, hasn’t moved in the Senate yet. But if it were approved, money collected from stay-at-home commuters would be redirected to their hometowns – something Jackson has acknowledged would hurt Cleveland.
“Our thoughts on that are that it should not happen,” Jackson said recently. “We do know it would have a negative impact.”
The provision also is subject of a lawsuit in Franklin County that the conservative Buckeye Institute filed in July.
And even if the provisions stand, eventually workers might seek refunds from Cleveland and sue if the city denies the requests.
If just 10 percent of one-time commuters were to continue working from their suburban homes, and the existing laws remain unchanged, the long-term loss to the city still could amount to tens of millions of dollars a year.
More from Cleveland City Hall
Cleveland City Council says state should OK more drop boxes for absentee ballots, urges legal action
Cleveland City Council wants city to join lawsuit fighting efforts to shorten Census counting period
Play it Forward Cleveland to return, seeks instrument donations for second year of free lessons for youth
Legislation targets $14 million at rebuilding three key roadways in Cleveland
City of Cleveland bans tailgating before Browns home games
©2020 The Plain Dealer, Cleveland
Visit The Plain Dealer, Cleveland at www.cleveland.com
Distributed by Tribune Content Agency, LLC.