SHELBY, Ohio – Legislation amending the city of Shelby’s municipal income tax ordinance was begrudgingly passed by Shelby City Council on Monday evening.
With four affirmative votes and one against, council passed the second reading of amended Ordinance 50-2015 as mandated by the state of Ohio. The amendments to the codified ordinances of the city of Shelby regarding municipal income tax will affect deadlines for estimated taxes as well as penalties and interest rates charged for missed deadlines.
Finance Director Steve Lifer speculated council’s displeasure with the ordinances stems from the fact most cities would prefer Ohio not tell them how to do their local business. He said some members of council might feel the state is overstepping its bounds.
“If this were a document we would’ve done on our own, there wouldn’t be any problem,” said Lifer. “The fear is we’ve lost a little bit of local control in what we can and can’t change because this is a document we have to follow.”
In 2014, the General Assembly determined it was necessary to review and amend Chapter 718 of the Ohio Revised Code to set forth statutory requirements for municipal income tax codes in Ohio. House Bill 5 was enacted in December 2014 and mandated that municipal tax codes be amended by Jan. 1, 2016.
With the third reading of the ordinance scheduled for the Dec. 21 council meeting, Shelby barely made the deadline.
Council member Pat Carlisle voted yes to the second reading of the amended ordinance though she stated she would prefer to vote no, and council member Nathan Martin voted no – largely a symbolic gesture.
“If you vote against [passing the amended ordinance], the ability to collect income tax would be in jeopardy,” said Lifer. “It would be very detrimental to the city if [council members] don’t pass [the ordinance], and they know that. They just want people to know when we lose local control it’s not a good thing.”
Even the ordinance language explicitly states that council is “reluctantly” adopting the ordinance.
“Council also finds and determines that the constitutionality of certain provisions of the state-mandated code may have put in question by recent decisions of the Ohio Supreme Court,” the ordinance reads. “But these provisions must be included if the municipal income tax code is to be ‘levied in accordance with the provisions and limitations specified in Chapter 718’ and thus reluctantly are adopted by this council but are disclaimed to the extent they are unlawful or unconstitutional.”
The ordinance language also purposefully states “the Home Rule Amendment of the Ohio Constitution, Article XVIII, section 3, states that ‘municipalities shall have authority to exercise all powers of local self government,’ and the municipal taxing power is one of such powers of local self-government delegated by the people of the state to the people of municipalities.”
Lifer stated all municipalities in Ohio that collect income tax will have to adopt this new tax ordinance. He noted he does not agree with the new tax ordinance due to state involvement in income tax collection leads to a slower return time and less transparency.
“I just think local folks know what the local needs are, I don’t think the state people know what the needs are in Shelby,” said Lifer. “We hear people’s input locally and we know what’s going on in our town.
“I don’t think Columbus folks know what’s going on in each and every town,” he continued. “That individual sense of pride in what’s needed and not needed is what you would lose.”
The city hired Jim Neusser of Ohio Munitax LLC to write the template for the new tax ordinance, and the city tweaked the template to fit their needs. The ordinance will establish uniform due dates across the state of Ohio for estimated taxes and the amount taxpayers owe.
“It streamlines it throughout the state, which will make it easier for tax preparers,” said Lifer. “Right now one city might have a different set of deadlines than another, and it’s difficult for tax preparers to keep up.”
Starting Jan. 1, 2016, those who pay estimated taxes in the state of Ohio will have deadlines on April 15, June 15, Sept. 15 and Dec. 15. Lifer noted the ordinance also mandates all cities charge the same penalty and interest rate for those who don’t pay taxes when they’re supposed to.
