GOPC has released Potential Impact of Changing Municipal Income Tax Laws on Smaller Ohio Cities, which is a review of municipal income tax collections among 316 smaller cities and villages in the state.

GOPC has concluded that if changes are made to current emergency provisions, the majority of analyzed communities would lose revenue that is vital to operations and long-term investments, like roads, utilities, and economic development opportunities.

As part of the 2020 emergency response to COVID, the Governor and General Assembly passed a law that allows cities where employers are located to continue to collect taxes from employees, even if they are working remotely in a different jurisdiction during the pandemic. HB157 and SB 97 (134th General Assembly), and a collection of lawsuits, seek to repeal this emergency measure.

Utilizing data made available by the Regional Income Tax Authority, GOPC reports that 300 small cities and villages could lose $105 million annually if the emergency measure is repealed. GOPC also examined the impact of the proposed repeal on Ohio's 16 small legacy cities and finds that 62.5% of them can anticipate net losses in municipal income tax revenue resulting from the proposed changes.

This Review adds to GOPC's A Mortal Threat to Ohio's Economic Competitiveness, which estimated, in September 2020, that Ohio's largest six cities could lose $306 million annually if the emergency remote worker provision was repealed. The Review today confirms the proposed repeal would have negative consequences in communities beyond 'the Big Six.'

Today's Review confirms that adjusting the tax code is a complicated proposition and could cause irreparable harm if done hastily and without adequate input from those places likely to be most impacted.