Cities warn that income tax changes would be devastating

Ohio mayors want to keep collecting income taxes from workers who might now be working from home — outside the municipalities — and said changing the rules now would invite chaos.

“This is probably the biggest issue for the Ohio Mayors Alliance because of what it would do to our communities should the state decide to fiddle with this,” said Dayton Mayor Nan Whaley, a co-founder of the bipartisan alliance. “It’s important for us to pay very close attention to this. It is top of mind for us.”

Last spring, as thousands of Ohio workers left downtown office buildings to work from home during the pandemic emergency, state lawmakers agreed to allow municipalities to continue to collect income taxes from people who work outside the cities’ limits.

But last fall two bills were introduced to end that agreement and return to Ohio law that says taxes are paid to cities where workers work. The bills failed to gain approval in 2020.

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State Sen. Kristina Roegner, R-Hudson, said she plans to reintroduce her bill during the new legislative session. She said it’s a matter of fairness and a question of constitutionality.

“I thought it’d only be a couple of weeks or months (of working from home.) Now we’re closing in on close to a year,” Roegner said on Monday. “I don’t think people should be paying taxes somewhere they don’t live or work.”

She added that eventually cities will have to reckon with a permanent shift in where a large swath of people work post-pandemic. City leaders should be thinking about this sooner rather than later, she said.

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“We understand long term that we have to win all these workers back,” Cincinnati Mayor John Cranley said. He added that he doesn’t believe there is political will in the Ohio General Assembly to make changes right now.

Whaley said if lawmakers block cities from collecting income taxes from people working from homes outside the cities, “it would be devastating. I think most of the cities would have to declare bankruptcy right away because there is just no path forward if this revenue were taken away and nothing put in its place.”

She added that once lawmakers dig into the ramifications, they likely won’t have the appetite to make the change.

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