“I don’t think it’s constitutional to be able to tax someone who doesn’t step into your town,” said Senator Kristina Roegner, R-Hudson, the sponsor of SB 352.
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The repeal of HB-197 could dry out the revenue that cities have relied on for decades and, according to Nan Whaley, Mayor of Dayton, run the risk of “life and death services” provided by first responders.
It will also force cities to change their model of maintaining and attracting businesses and jobs, according to city administrators in Centerville and Kettering.
“If you had a change as draconian as this, you’d have to change your economic development strategy,” said Wayne Davis of Centerville. “Some cities are able to change the model.”
Kent Scarrett, executive director of the Whaley and Ohio Municipal League, said any shift in the way income taxes are collected with the coronavirus emergency measure will require extensive debate.
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“The rapid loss of this income,” said Scarrett, “combined with the already lower unemployment and unemployment income due to the coronavirus” would have a potentially devastating effect … on service delivery, particularly police and fire services. ”
Debate on tax issues
Cities have long talked about the theory that remote working is a future trend and what impact it could have on local households, Scarrett said.
“But now we are here,” he added. “It happened almost overnight.”
SB 352 was introduced earlier this year. A similar proposal – HB 754 – was introduced in the Ohio House of Representatives.
SB 352 is supported, according to its website, by the Buckeye Institute, a think tank that aims to drive public policy of the free market.
Like Roegner, Robert Alt, President and Chief Executive Officer of the Buckeye Institute, called the emergency measure unconstitutional in March.
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SB 352 would “end the corresponding Alice in Wonderland world in which work that is actually done at home is absurdly done in an often higher taxed office location,” according to a statement by the organization.
Aside from the Ohio Municipal League, proposals to lift the emergency measure will be questioned in March by the Greater Ohio Policy Center, a nonprofit community advocating for cities.
SB 352 and HB 754 are “nearsighted and mortally jeopardizing Ohio’s economic competitiveness” according to the GOPC.
Roegner said she doesn’t think her legislation will be implemented this year but plans to reintroduce it in 2021 if she expects a vote.
Working from home effects
How the pandemic plays out could be a factor in what changes need to be made to the urban income tax issue, said MP Niraj Antani, a Republican from Miamisburg who recently won the election for the Senate seat in Ohio’s 6th district Has.
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“I think when this pandemic is over we’ll see what happens and if people are back to work in the office or how many are working from home,” Antani said.
“Personally, I think it will be some kind of mixed bag. I think we will see a lot of people returning to office environments and some will continue to work from home, ”he added.
The problem of working from home has hit Kettering differently than most cities. In September, Synchrony Financial informed the city that it would be vacating its premises by the end of the year so that employees could work from home permanently.
The move will cost Kettering nearly 1,900 jobs, and according to city manager Mark Schwieterman, Synchrony’s annual payroll was about $ 120 million.
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“Cities like ours with a higher daily population than our population are an indication that we have built an infrastructure system to support businesses,” said Schwieterman.
“If there is a significant trend towards working from home after COVID, cities of all sizes and sizes will certainly have to contend,” he added.
Davis, the city of Centerville, has done some preliminary research into the potential impact of SB 352 and HB 754 but has not yet “digged in” as neither was seriously discussed by the General Assembly.
Davis noted that at this point, city officials “believe there is the potential for it to be net neutral for us” because Centerville’s top employers are more focused on the service industry.
BY THE NUMBERS
• $ 306 million: Amount Ohio’s six largest cities could lose annually if proposed bills for local income tax laws pass.
• 4.88 million: Total employment in Ohio in 2018.
• 80: percentage of Ohio community based businesses.
• 70: Percentage of Ohio City budgets allocated to the Police and Fire Department
• 42: percent of the US workforce working from home in June.
SOURCES: The Greater Ohio Policy Center, US Census, Stanford University, Ohio Municipal League.