Bexley News

City officials cautious about effects of HB 5

Legislation has positives such as streamlining tax forms but there are concerns of lost revenue

By ThisWeek Community News  • 

The city of Bexley is taking a wait-and-see approach and monitoring the potential impact of statewide legislation designed to overhaul Ohio's municipal income tax system, according to Mayor Ben Kessler.

Supporters say House Bill 5 will streamline the state's approximately 300 different local tax forms and make it easier for companies to do business in Ohio.

The Ohio House of Representatives approved the bill by a 56-39 vote on Nov. 13, and the legislation is now under consideration by the Senate.

Some Democrats and a number of cities oppose the bill on the grounds that it could lead to a loss of local tax revenue, on top of the loss of the estate tax and cuts to the state's Local Government Fund.

Kessler said he supports the goal of simplifying the tax code and making it more appealing for businesses to operate in Ohio, but the lost revenue that could result is "the reason municipalities have mixed feelings about House Bill 5."

Kessler said he does not have specific numbers of how much Bexley stands to lose if HB 5 becomes law or what city services or programs might be affected.

Estimates of potential lost revenue vary by city, from $10,000 to more than $2 million.

State Rep. Michael Stinziano, a Columbus Democrat whose district includes Bexley, is among the legislators who voted against HB 5. He discussed the potential impact of the bill during a Nov. 7 town hall meeting at the Bexley Public Library.

Stinziano said he found it challenging to balance the interests of business leaders who supported the bill with those of municipalities and other constituents who say it could lead to lost revenue.

"Normally in Columbus, in particular, all of these (constituents) battle in the same direction, and we're not there right now," Stinziano said during the town hall meeting.

Kessler said he's spoken with Stinziano several times about HB 5 and its potential impact on Bexley.

"I think he understands the city's position," Kessler said. "It's like any piece of legislation -- it has its upsides and its downsides."

One of the provisions in HB 5 that has garnered opposition is a requirement that cities allow businesses to carry forward net operating losses. Instead of claiming a net operating loss in the year it was incurred, a business could apply it to future years to reduce its tax liability. The allowable carry-forward amount would start at 50 percent in 2017 and increase to 100 percent in 2022.

Bexley is one of several cities in Franklin County that do not allow businesses to carry forward these losses.

Kessler said he, city council members and other city administrators will continue to evaluate the consequences of HB 5, and whether any revisions are added to the bill as it moves through the Senate.

Bexley has already done as much as possible to maximize efficiencies and make up for losses in state funding, Kessler said.

"We're going to be very cautious as to how to protect our income stream," he said.

He added that reductions in state funding amount to "passing on the burden locally, and something has to give."