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No. 2 January 31, 2003 PLEASE CIRCULATE THIS BULLETIN TO YOUR COUNCIL, DEPARTMENT HEADS & STAFF Taxes, Cuts and a Whole Lot More. Governor Taft this week unveiled his proposals for new revenue he says is needed to balance the state's budget during the upcoming biennium. Included in that package, which is labeled a "tax reform" by the administration, are changes to municipal income tax, which the League will watch very closely. The entire proposal for "tax reforms" and municipal tax changes will be laid out completely on Monday, February 3, when the Governor is expected to unveil his entire budget. Beyond the many cuts Governor Taft has already said he will execute and propose, including a $30 million cut to local government funds in the current biennium, he will also propose expanding the sales tax base. The list of items is extensive and includes: cable TV services, lobbying and limousines, dry cleaning, magazine subscriptions, newspapers, non-public parking, tavern cover charges, real estate commissions, taxi services, tickets to movies, professional sporting events, amusement parks and a number of other services. We will have to make sure that some of these inclusions do not conflict with local admissions charges. Such a conflict would further erode the resources of some of our members, which levy such charges. The Governor's proposal, would also double the state taxes on beer, wine and spirits and increase the cigarette tax by 55 cents per pack. The proposal would also reduce the state property tax rollback on business properties from 10% to 5% and cap the rollback for homes valued over $1 million. The proposal would also reduce the state income tax for some Ohioans and virtually eliminate the tax for earners making less than $20,000 a year. While the expansions in the sales tax would substantially help county governments with new revenues from their piggyback sales taxes, municipalities and townships would not benefit directly. The only indirect benefit from the $2.3 billion biennial increase to state revenues is that such new revenues may eliminate further reductions in the local government funds. On the municipal income tax proposal, a state tax study chaired by Tax Commissioner Tom Zaino released many proposed changes in a draft report this week. Noticeably absent from the report was a scheme to have the state directly collect for all municipalities the corporate net profits portion of the municipal income tax. However, this was a report and did not give the kind of details needed to fully analyze the impact of its recommendations. Only legislation can really do that and legislation will be what we see on Monday when the Governor releases his budget. The administration has assured us many times that they want a proposal that will make it easier for businesses to file their municipal income taxes and a proposal that is revenue neutral for our members. We will judge what we see in the budget on Monday by that standard. If you're interested in reading more about this proposal, log on to our website, at omunileague.org. There we have set up a link to the Department of Taxation's website on which the entire tax draft study is displayed. We will also see on Monday what the final decision was on whether the Governor's proposed gas tax initiative will go into the biennial budget or the Ohio Department of Transportation Budget. That decision had not been finalized by our deadline. The Public Employees' Retirement System (PERS) Thinks You Have Plenty of Money. Through the promulgation of a rule, PERS would like to have employers send in their contributions to the pension fund every month. Currently employee contributions to the fund are sent in monthly, while employer contributions are sent in quarterly. To catch up to that schedule, public employers in one year would have to pay fourteen months of contributions, instead of the equivalent of twelve. PERS would like this rule to go into effect July 1, 2003, i.e. in the middle of your fiscal year. In addition, PERS will seek legislation to speed up their penalty provision when employer contributions are not submitted to the fund in a timely fashion. While, some of our cities and about half of our villages already pay their employer contributions monthly, many do not. To catch up, PERS estimates that municipalities would have to cough up an additional $30 million this year. The city of Akron would have to find an additional $1.5 million. The city of Cleveland would have to find $5.5 million laying around the old municipal money bin to meet its obligations under this new rule. Other examples include: Canton, $581,000, East Cleveland, $125,000, Hamilton, $537,000, Findlay $206,000, Grove City, $80,000, Eastlake, $117,000, Garfield Heights, $130,000, Lorain, $353,000, Kettering $352,000, Massillon, 4166,000, Newark, $258,000, Oxford, $76,000, Sandusky, $179,000, Shaker Heights, $290,000, Springfield, $397,000, Toledo, $1,568,000, Warren, $270,000, Westerville, $245,000, Youngstown, $460,000. Even though this is a rule, your local legislators can be allies in voicing your concerns to PERS about the ridiculous timing of such a rule. Ask them to help and tell them why. You can also voice your opinion on this matter by writing or calling Laurie Hacking, Director, Public Employees Retirement System, 277 E. Town St., Columbus, OH, 43215, (614)466-2822. Brownfield Training. What is a Brownfield? If you do not know the answer and would like to, feel free to attend a training seminar sponsored by the Ohio EPA. The program is free and will be held at different locations around the state and on three different dates in February. All the information that you will need about "Brownfield Basic Training For Local Governments" can be found on our website. The address for the League is www.omunileague.org. Once you log on, all you need to do is click on Brownfield Basic Training. OML’s Legislative Luncheon The Ohio Municipal League’s Legislative Luncheon will be held on Wednesday, March 19, 2003 in the Statehouse atrium. Registration forms may be obtained on our website at www.omunileague.org The cost remains at $60.00 with the reduced rate of $50.00 for each additional person registering from your municipality, so encourage your staff to attend. The League has invited all the legislators but a personal invitation from you would be even better. |
