Rep. Kent Smith (D-Euclid) voted in opposition Wednesday to House Bill (HB) 157, legislation that would prohibit the collection of income taxes from workers who aren’t physically in an office inside the city or village limits.
“By passing HB 157, Republican Caucus in the Ohio House of Representatives took steps towards defunding police departments across the state. The municipal income tax is the primary source of revenue for municipalities, and that revenue pays for police, fire, and EMS. These critical public safety services are generally the largest budgetary expense of our cities. House Bill 157 would reduce this revenue stream and will have a direct impact on these vital frontline services.
“Large cities would be adversely impacted by passage of this bill, but so too would communities of all sizes across the state of Ohio. According to a Policy Matters Ohio analysis, the city of Beachwood, which I represent, could lose between $1,300,000 and $4,100,00 in tax revenue if this bill becomes law. That’s a 4.8% - 14.5% loss in their budget. Another consequence could be that some of Ohio’s major cities might suddenly lose so much revenue that that they default on their bonds. Bond ratings could be affected throughout the metropolitan area and threaten economic development efforts,” said Rep. Kent Smith.
The bill comes as many Ohio workers remain on work from home status amid the coronavirus pandemic. Opponents of the bill say the changes could undercut local government budgets, with some cities set to lose millions of dollars in revenue. Democrats said these shortfalls could threaten the ability for communities to fund emergency services and other essential programs.
Democratic lawmakers offered several amendments to the bill during House session Wednesday, including measures that would:
- Extend current temporary tax rules that charges taxes for people’s worksite location through 2022. Democrats said that cities could lose millions of dollars in revenue and threaten funding for emergency and essential services.
- Requires the Director of Public Safety to study and report on reductions in law enforcement personnel and other public safety services due to revenue losses resulting from the bill.
House Republicans rejected both amendments.
After clearing the House, HB 157 moves to the Senate for consideration.