Marion City Council members disagree on the possible impact of reducing a tax credit for those people who live within the City of Marion, but work in other cities. Some members believe there will be few people that choose to move out of the City, while some feel many people will move, which will result in a spirally downturn for the community.
At their meeting on Monday, April 9, City Council discussed an ordinance that calls for reducing the credit from 100 percent to 50 percent. As an example, this would mean that a person living within the City, but working in Columbus, would not only pay the City of Columbus’ income tax, but would also pay 50 percent of the City of Marion income tax. Currently, those individuals pay no income taxes to Marion.
Councilman Ayers Ratliff asked if the tax credit was reduced, then what incentive would council be giving people to continue living in Marion if they work elsewhere.
“I think if we do have people move, it will be a negative ripple effect in our community for years to come,” said Ratliff, explaining there would be fewer students in the schools, further reductions in state tax payments, fewer people purchasing goods locally, and more.
Councilman Dale Osborn said he disagreed with Ratliff “100 percent” and that be believes the change will help to improve the services provided by the City which would be a positive incentive. He said if City services continue to be cut and diminished, then people will definitely move away. Council member Becky Gustin said she agreed with Osborn and she doesn’t think the change would chase many people away.
Mayor Scott Schertzer, who originally suggested the tax credit reduction, asked Ratliff if he knew of statistics that showed his fears have come true in other communities. Ratliff said that he does not have statistical evidence, but believes his feelings stand up to reason.
“There’s just something inherently wrong … with people who live in Marion, but pay nothing toward the services they are provided,” stated Schertzer.
Schertzer said he understands Ratliff’s fears, but reiterated his belief that something has to be done to increase revenue for the City of Marion. He said that while he agrees with Ratliff that reducing the income tax credit will not fix all of the City’s revenue issues, it will help to cover the future reductions still coming from the State of Ohio.
“Doing nothing, we know what that means. And that is not a good outcome,” said Schertzer, explaining that, for now, he chooses the bandaid solution.
Schertzer said the loss of revenue is not due to anything local officials have or have not done. He said it is because the State of Ohio is no longer sending funds back to local governments, something he said they have done for decades. He said he is trying to prevent a growing need to attempt to increase the City Income Tax rate, which he said would have to be approved by local voters at the ballot box.
Ratliff, speaking directly to the audience at the meeting, said that once a government raises taxes, those taxes never go down. He said this is a tax increase to those who have not been paying taxes previously due to the credit. He warned that if revenues increase for the City, the tax credit will still never return because officials will always find somewhere to spend the money.
Ratliff also pointed to the people who live outside of Marion, but work within the City, and they have been, and will continue to, pay taxes for services they do not receive.
Schertzer said that other communities have either already reduced their similar tax credit or they will be doing it in the near future.
Councilman Ralph Cumston agreed with Schertzer saying that Council was given statistics that showed 39 percent of Ohio communities already have no tax credit or one that is less than one hundred percent. He said the City has already made deep cuts and the available choices are just running out. He reminded Council that City employees have already taken cuts in benefits and salaries that equal large sums of money. He also said while the State of Ohio experienced revenue decreases of their own, they were able to balance their budget by reducing the funds they were sending local governments, something the City of Marion cannot mimic.
Marion resident Ralph Hill said he feels the same as Ratliff. He lectured City Council and Administration that they agreed to the current hospital lease too quickly and said the hospital is now making millions in profit that could be coming to the City to help with revenue. He also said City officials have wasted money by allowing a police major paid days off to spend time working as the Ohio FOP President, giving a raise to the Law Director (this raise was passed by a previous council and came into effect following the last election), still providing money to CAN DO, and giving tax breaks to companies. He said he “resented” Council’s mentality.
Another resident, Dave Hollenbach, said he doesn’t feel that he should have to pay more just because jobs left Marion. He also said he doesn’t feel like it is the State’s fault the City is in its current situation, saying, “At least the state had the brass to take care of it at the state level.” He stressed that he feels that everybody should pay taxes, meaning he is in favor of reducing the tax credit.
Osborn tried to put the changes simply with an example. He said to think that he, Osborn, and Cumston live side-by-side. He doesn’t work in another community with an income tax, so he pays the full amount of City income taxes, say $400 per year. Cumston works in Columbus, so he gets a 100 percent tax credit for the City of Marion. Osborn said he and Cumston live next to each other and enjoy the exact same services, but he pays and Cumston does not.
Osborn then explained that by reducing the tax credit to 50 percent, he would continue to pay $400 per year, but Cumston would now pay $200 per year. Osborn said he believes this is much fairer.
Ratliff said Osborn’s example was not complete. He said you have to remember that not only will Cumston be paying $200 per year he is not currently pay, which he called a tax increase, but Cumston will also continue to pay the same income tax to the City of Columbus as he had before.
“If (residents) are going to be taxed twice, I don’t see the incentive we give people to continue living in the community,” said Ratliff.
City Council took no action on the ordinance Monday, but instead held the second reading. The issue will have its third and final reading at the next full City Council meeting on Monday, April 23, 2012. A vote is expected to happen at that time.
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