Opponents of a proposed law to make local income tax procedures the same across Ohio say it would reduce revenue by the millions for cities.

The proposed law is on a fast track in Columbus, despite organized opposition by leaders of 78 cities and villages, including at least two dozen in southwest Ohio.

Their coalition, Ohio Municipal Advocates, says House Bill 5 would not just require their income tax forms and regulations to conform, which is fine by them. It would reduce government revenue in virtually every city. They estimate a total annual impact of $36 million to $39 million.

If approved and signed into law, the bill would take effect in January 2015.

Supporters, led by a 24-member consortium of statewide organizations, say it’s not about reducing business taxes. Rather, it’s about boosting productivity, slashing red tape and leveling Ohio’s economic playing field with those of other states, 40 of which don’t even have local income taxes.

“The current system is such a mess it’s almost bizarre,” said Jack Kostak, president of Vandalia-based All-Seal Home Improvement Inc., who plans to address legislators about the merits of a bill co-sponsored by Rep. Cheryl Grossman, R-Grove City, and Mike Henne, R-Clayton.

Kostak said 18 other Dayton area businesses, “so far,” have endorsed his personal message.

Because many of his company’s 17 employees sell and install windows, siding and other residential upgrades in multiple jurisdictions, he’s required to withhold taxes for them in each of those towns.

“I have 621 pages of withholding documents with 21,000 entries for 2012 alone. Many of them are just for pennies, but I have to write those checks,” Kostak said.

Among a long list of changes, HB 5 would simplify that by increasing the number of days an employee would have to work in a city before taxes would be due there and by redefining a “day” to where the employee spends the majority of a work day.

Companies with mobile workforces would boost their withholding to cities where company offices are located, and reduce or eliminate it to towns workers visit to sell and install products.

All-Seal, a 23-year-old company, does about 1,000 jobs each year in the Dayton area, Kostak said.

City administrators and elected officials across the state insist that if the bill truly was about uniformity, not reducing tax revenues, they would rush to support it.

“It’s being referenced as a municipal tax uniformity bill. That sounds great,” said Oakwood vice mayor and Dayton First Suburbs consortium chairman Steve Byington.

“It sounds like something we need, which makes it a challenge to organize opposition. That’s like calling it the ‘I Love Puppies Bill.’ But it isn’t that. It has serious ramifications for local governments that have already taken many other hits.”

Ohio cities and villages lost about $200 million this year with the end of the estate tax. Communities with a high percentage of wealthy citizens lost the most.

“This bill is far more indiscriminate. The impact will be broader. It will hurt poor cities as well as rich ones, and everyone in between,” said Byington, who is one of the leaders of Ohio Municipal Advocates. “In general, it’s good for business.”

Introduced Jan. 30 with priority status and based on proposed 2012 legislation that expired with the previous session, it was taken up Feb. 14 by the House Ways and Means Committee.

Kostak bristles at suggestions that his motivation for supporting it is to pay less taxes.

“This is not an attempt to do that. It’s disappointing to me that local officials don’t see this as a better way to do things. We would pay virtually the same amount if this became law. We would simply pay it to fewer communities,” he said. “It’s true that bedroom communities would lose some tax revenues.”

Oakwood would lose $394,000 a year, according to the Municipal Advocates website, ohmuniadvocates.com. An estimate by city finance director Cindy Stafford based on the 2012 bill said the impact would be $430,475.

City manager Tim Riordan said HB 5 as currently written would cost the city of Dayton $2 million to $2.25 million, although muniadvocates.com says Dayton would lose $3.6 million). Cleveland says its hit would be $6 million in year one, followed by $1.65 million each year after that.

On Feb. 13, Henne told the House Ways and Means Committee that one outcome of the state’s current “burden of compliance” is that businesses and jobs go to other states.

Grossman said HB 5 incorporates several compromises between the Municipal Tax Reform Coalition, which pushed for the bill, and city representatives.

 Byington agreed that “some of the wording has been changed” from the 2012 measure proposed by Grossman and Henne, “but the overall scope hasn’t changed dramatically. The worst culprits are still there. The changes are minor and were not made with local input. No municipalities favor it.”

Some elected officials, including Rep. Jim Butler (R-Oakwood), whose House district also includes Kettering, Centerville, part of Dayton and Riverside, have pledged to oppose a local tax uniformity bill that would not be “revenue neutral” for cities.

According to Riordan, “There are are a lot of legislators and cities that have no interest in using a tax uniformity bill to take more away from the cities.”

He believes HB 5 is far from a done deal. “We’ll have a bill eventually that has several uniformity measures, yet is revenue neutral. If not, the figure is huge for Dayton. We will have just two choices: cut services again or raise taxes.”

Byington said cities fear the bill “will just be tossed into the entire budget package, which is what happened with the estate tax bill. We had a very organized opposition to that as well. Legislators had no choice. It was part of the budget bill. They said they had to vote for that. I hope there will at lest be a vote on this bill.”

Kostak said he’s been adhering to the current system for more than 20 years.

“Being conscientious about withholding is almost a punishment. Ohio truly is an outlier. It has by far the most complex system in the country. I’m cautiously optimistic this bill is going to pass.”