Many of our member municipalities have received a letter from State Representative Tim Schaffer regarding a bill he is sponsoring, HB 191. Under provisions of the bill, five cities (Columbus, Toledo, Cleveland, Dayton and Cincinnati), because they collect more than $100 million annually in municipal income taxes, would have to remit 25% of the tax dollars paid by non-resident commuters to the commuter's community of residence. In that letter, Rep. Schaffer asks for support from those communities which would benefit from this redistribution of the municipal income tax.

We have a number of concerns about this proposal, which we have mentioned in previous Bulletins. Our primary concern is, obviously, a budgetary one. While this proposal would help many outlying communities in our major metropolitan areas which are facing tough budgetary times, it would also blow a hole in the budgets of five major cities of 10-18%. This proposal, by our initial estimates, would cost the city of Columbus alone about $45 million, hardly an easy gap to make up. Divvied up by all the communities that would get a piece of that money, including cities, villages and townships of residence, such a scheme would cause: an unmanageable fiscal crisis in five major cities, help some outlying communities who need additional revenues, not send enough to a number of communities to a make a difference in their budget problems and send dollars to communities who do not need the money. Simply, it is a scheme in which four things will happen, three of which are bad.

Obviously, there is an attractiveness to this bill for many of our members. If this bill passes, new dollars will flow into the community without any political responsibility. If there is any political heat generated by the need for new dollars, it will only be felt in the central city where the fiscal crisis will be created. It's free money for the budget, raised by the political efforts of the central city and then spent by outlying municipalities and townships. Neither council, nor the mayor nor the township trustees have to raise a finger to raise this money.

While these questions are important, many of our members, who would receive dollars under this proposal, raised for us additional questions about the wisdom of this proposal:

* Doesn't this proposal, by reducing the revenue of the five largest generators of income tax revenue, penalize those communities for being successful at creating an attractive environment for jobs?

* Doesn't this proposal, by reducing the revenue of the five largest job hubs in Ohio, reduce the ability of those cities to remain attractive for future job growth by reducing those cities' ability to pay for the services needed to stay attractive?

* Why should municipal income tax dollars ever be given to townships, which have no income tax, as would be the case under this proposal?

* If this is a good idea for municipal income taxes, why shouldn't this also be true for people who live in one school district and own property in another school district? Afterall, unlike with municipal services and the income tax, property tax payers paying school taxes in another district receive absolutely no services for the tax dollars they pay. The same is true if a person lives in one county and owns property in another, thus paying for mental health, public transportation and a number of other services which serve only residents of the county. County piggyback sales taxes also constitute taxes levied against non-residents of the county, who do not vote for that county's commissioners and who receive no services from the county when they shop in that county. Why aren't all of these taxes included in this bill?

* Why is this sharing just imposed on those cities which collect over $100 million annually in income taxes? And if this bill is passed, what is to stop the General Assembly in the future from lowering that threshold to $1 million? Isn't that the logical conclusion to such legislation? If this proposal is fair, why is a lower threshold not fair and exactly what municipalities will face in the future?

* Why should a community which, through their zoning, chose to be a "bedroom community" be sent tax money from a community which chose to make room in their community for job growth? Many of those commuter communities wouldn't exist or would be much smaller if the job hub community hadn't made the decisions they made and decided to pay the costs (e.g. traffic congestion and environmental problems) of managing job growth.

* Why should the voters of those job hub communities, who voted for the current municipal income tax rate, have services that were promised during those elections, now have the rules of the game changed and those service promises broken by a severe cut in their community's revenues?

We think all of these questions are important and will raise them during consideration of this bill. We know some of our members will support this bill. Their budgets are tight and they are looking for new revenues. Raising their income tax rate or reducing their credit may not be an option and this bill offers the hope of new revenues. However, as we point out above, there are a number of questions raised by this legislation that require careful consideration.