Anger bubbled to the surface Tuesday as city council struggled to embrace a new tax code handed down by the state.
“I think this is a clear slap in the face by the state,” said Amherst councilman Joe Miller, calling sweeping changes by the Ohio General Assembly a “disgrace” that threatens home rule.
“They are cutting our funding and cutting off our opportunity to replace that funding. We’re just placing our heads on the block and it’s getting old,” he said.
Amherst treasurer Richard Ramsey said he voiced concerns to state lawmakers over huge losses to city coffers.
“These changes in the law… we hope for the best and plan for the worst so this might be inflated but they’re going to cost us (an estimated) $289,000 per year” in lost revenue, he said.
As the News-Times reported in July, the state is imposing a brand new tax code that all cities must adopt by Jan. 1.
It defines income cities can and cannot tax, notably barring collections on certain benefits for highly-paid executives. Businesses must be allowed to deduct half of all new net operating losses and carry them forward five years.
But most harmful, Ramsey said, is language benefiting “pass-through” workers such as roofers and pavers to work 20 days in the city limits before they must pay taxes. Previously, they were only allowed 12 days.
That change alone will cost Amherst roughly $200,000, Ramsey believes.
Other key points: Cities won’t be allowed to collect on taxes from off-site or Internet sales; will have to produce monthly instead of quarterly remittances; will have to pay out on lower minimum refunds; and will require filing by seniors who do not have taxable income.
One area where Amherst does have some wiggle room is taxation of minors.
Council’s finance committee worked Tuesday to embrace a resolution exempting children under age 18 from paying or filing income taxes, though Miller questioned why minors do not pay taxes to the city if they pay federal and state taxes.
Gambling winnings will be taxed starting Jan. 1. Right now, only lottery winnings are taxed, generating roughly $2,500 in tax revenue in 2014.
Councilman Chuck Winiarski was upset by that expansion, saying it will be difficult to explain to charitable groups — such as the American Legion, Amherst Eagles, and school groups that use gambling to raise funds — why they will have to file a return for winnings exceeding $200.
“This just seems like a huge burden imposed on us,” he said.
In all, council is expected to adopt five measures to adopt the new tax code.
The legal language is based on a template created by the Ohio Municipal League, which Ramsey said shares many of the worries voiced by council.
“There still may be a bit of litigation out there arguing that this is unconstitutional,” the treasurer said, urging residents to contact state reps Dan Ramos (D-Lorain) and Gayle Manning (R-North Ridgeville) with complaints.
There is no rush to pass the five measures. They are expected to go three full readings on the floor of council with passage anticipated in about six weeks.
Jason Hawk can be reached at 440-988-2801 or @EditorHawk on Twitter.
Photos by Jason Hawk | Amherst News-Times City treasurer Richard Ramsey explains the painful ins and outs of the new tax code state legislators have imposed on cities — and how there is little that can be done to oppose it.