After a lot of discussion and passionate input from residents on both sides of the debate, Marion City Council voted Monday, April 23, to approve universal, or mandated, income tax filing and a reduction of the income tax credit for residents who work in municipalities with higher tax rates.
Council took up the issue of universal filing first. This will require every City of Marion resident with income to file an income tax return. Those affected would have income that is reported on a 1099 or W-2 form. Currently, you only have to file an income tax form if you owe taxes to the City.
Much of the discussion over universal filing centered on potential costs of implementation and the expected benefits to the City’s revenues. On several occasions, Marion City Auditor Kelly Carr and Deputy Auditor Cathy Chaffin, who serves as the City’s Tax Commissioner, assured Council that they would implement and maintain universal filing without any increase to their current budget.
Chaffin said they had recently filled an open position in the tax office for 32 hours per week. She said that means there are three people in the office, including her, and that would be enough to manage the workload.
Tom Oyster, city resident and candidate for Marion County Treasurer, said he’s not sure how the income tax office can handle up to an additional 10,000 forms without needing more staff. Carr said that each form does not require much additional time or auditing and so minimal extra time is needed.
Oyster also stated that the City could find itself in a position where, if people do not file, there could be thousands of people that would legally have to be pursued for collection. He said he just cannot believe there will not be additional costs to the City.
Chaffin said her office did record numbers of filings this year with a 24 hour turnaround, which is not required. She continued to assure Council there will be no requests to increase their budget.
The hiring made by the income tax office also elicited some debate, mainly from Councilman Ayers Ratliff who said he opposes a police officer being hired to work in the office. He said he doesn’t believe that hiring a laid off police officer, with all of his training, is best serving the community.
Carr countered Ratliff’s assertions, asking, “Is it using him appropriately by leaving him at home drawing unemployment.”
Ratliff said he just wishes that if the money was available to bring that person back, that he would be brought back for the police department.
Chaffin explained the person hired was making $27 an hour as an officer, but is not making just $12 an hour and is no longer drawing unemployment. She also stated a third person is required for state auditing practices to provide proper checks and balances for the income tax office.
Marion resident Ralph Hill lectured Council members saying the City never puts jobs “out for bid.” At least in this case, the position was advertised and posted on the City of Marion’s website.
Councilman Josh Daniels reminded the audience that unemployment benefits for City employees do not come from the State of Ohio. He said the City is self-insured and those payments come directly from the City. He said it’s not right to belittle the auditor for making a decision that saved the City money.
Council voted 6-2 to approve universal tax filing with Ratliff and Jason Schaber voting against the issue.
Income Tax Credit Reduction
The discussion on reducing the income tax credit came next. This will affect people who live within the City of Marion, but work in another community with a higher income tax rate. Currently the City gives those people a 100 percent credit towards the local tax, meaning they pay zero income tax to the City. The change approved Monday reduces that credit to 50 percent, meaning those same people will now pay the income tax to the community where they are working as well as 50 percent of the City of Marion income tax.
Marion resident and anti-tax advocate Ed Christian started the discussion by promising to file a ballot petition to rescind the reduction if it was passed by Council. He said people cannot afford the taxes and he doesn’t know why officials have to keep being told that fact.
Charlie Blevins, another city resident, said there needs to be a similar showing at every City Council meeting, referring to the standing room only crowd. Explaining that he worked for years outside of the City, he said it’s not right to put this additional burden on these individuals. He said they already miss two-to-three additional hours away from their families and they also pay a lot more expenses because they are working out of town. Blevins said there needs to be a tax that is paid by all instead of an increase that affects only a few. He said the problem actually needs to be fixed at the statehouse so that municipal income taxes are shared with the majority of those taxes going to the community in which people live.
Resident Mike McBride told Council that those not paying local taxes are a drain on the services. He said that while it doesn’t address tax fairness across the state, it does address fairness for those who live in Marion.
Marion’s State Rep – Shale is the Answer
Marion’s State Representative Dorothy Polanda attended Monday’s meeting. While she said there were ongoing committee meetings exploring the issues, she had no immediate answers for the City’s revenue issues. She did state that she is opposed to the State taking over the collection of municipal taxes, but is in favor of the coming elimination of the State Estate Tax which will further affect the City’s revenue. She said she understands the impact on the local communities, but stands behind the change.
Polanda talked about several grant funds and loan opportunities that are available to the City of Marion. Councilman Ralph Cumston reminded her that following the deep cuts by the State of Ohio, “giving it back to us in loans and grants is not going to solve our revenue issues.”
The only answer Polanda offered for the City’s revenue issues was shale. She stated that shale is a game changer and it has been discovered in Marion County. She said that while it’s not going to happen tomorrow, property prices will begin to rise because of this shale and “that’s Ohio’s recovery.”
Police Chief Asks Council to Act
Police Chief Tom Bell spoke to Council saying they authorized a police force of 69 officers, but the current force has just 41. Between assignments, military service, and injuries, Bell said, including him, there are only 33 officers patrolling the City streets. He said burglaries are skyrocketing and there is a heroin epidemic that is monumental.
“We have to make a plan. We have to do something,” said Bell. “What is City Council going to do to get us some help?”
Income Tax Increase Proposed
Josh Daniels said reducing the credit just adds 0.875 percent in additional income tax taxes to those working elsewhere. He asked what will happen if the City continues to have a revenue problem and then has to ask for a “modest” income tax rate increase of 0.25 percent. He answered his own question saying the people affected by the credit reduction will never vote to approve the new increase because they already saw their taxes go up.
Daniels suggested Council table the credit reduction issue and continue to explore other options, including an across the board income tax increase. He suggested the only plan that will work to bring back the police officers is a modest tax increase of 0.25 percent. He said the tax credit reduction will not get it done.
Councilman Dale Osborn agreed that reducing the tax credit is not a complete fix, but said he supports it because something has to change now. He said the City has cut and cut and they are out of options.
“I want my town back folks,” stated Osborn, who said if they find the credit reduction is not working, or if a tax increase is required, Council can always reinstate the full credit.
Daniels said he thinks this November would be the right time to ask voters for a 0.25 percent increase. He said if that request failed at the ballot, then Council could act to reduce the tax credit.
“We are not bringing back police officers with the amount that will be gained by the tax credit reduction,” stated Daniels, who mentioned the estimate revenue from the reduction would be about $215,000. He said a 0.25 percent income tax increase, spread across all resident, would generate $1.7 million and he feels that would bring back the police officers and firefighters.
Negative Impact Feared
Councilman Ayers Ratliff said he believes that once a tax is raised, it never decreases. He explained he feels that reducing the tax credit will negatively impact the community for years and years to come.
Ratliff said the real problem is a lack of jobs in Marion. He stated that problem needed to be fixed instead of creating double taxation. He warned that if a segment of the population leaves because of the tax credit reduction, it would cause a lot more issues because these are the people who have disposable income which they spend within the community.
Auditor Kelly Carr, at the request of Council member Becky Gustin, stated that Marysville, Kenton, and Findlay do not offer a tax credit at all. She said Delaware offers a 50 percent credit. Ratliff said that information actually proves his point because Marion’s credit is an incentive to live here.
“I agree they are going to move, but they are going to move because they are not safe,” stated Gustin.
Following the long discussion, City Council voted 5-3 to approve the income tax credit reduction. Ratliff, Daniels, Jason Schaber voted against the issue.
Deputy Auditor Cathy Chaffin said the reduction will take effect 30 days after the Mayor’s signature. That information came as a surprise to several on Council, who thought the change would take effect at the end of the year. There were made aware of this date before they voted to approve the reduction.
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