Budget provision could cost Ohio cities millions

Findlay Mayor Christina Muryn, along with other mayors throughout the state, is raising the alarm about a provision in Ohio's proposed operating budget that would allow workers displaced by the pandemic to file retroactive refund requests for 2020 and 2021. Muryn said the refunds could cost Ohio's cities millions of dollars and overly burden city tax departments as they field the requests and attempt to verify the claims. The mayor said employers could also face the burden of helping the tax departments track the location of their workers through the pandemic. Muryn alerted Findlay City Council to the retroactive refund language in the state's budget on Tuesday, asking city leaders to contact state lawmakers with the concern. While it's difficult to estimate the loss, refunds from the city of Findlay could be as much as $4 million, if the refunds are made retroactive to 2020. And then there's the management challenge. "We have a team of eight individuals in the income tax department, and trying to validate the requests, track the requests, explain to taxpayers that their tax liability may shift to another municipality, etc., will cause significant challenge and frustration for all involved," she said. House Bill 110, the state's operating budget, has passed both the House and Senate, and is in conference committee where both chambers will work out their differences on the budget to create a final bill. The language allowing the refunds was added by the Senate. Lawmakers have until June 30 to pass the budget, now estimated at $75 billion. Last year, the Ohio Legislature passed a temporary provision to provide stability for employers and local governments that "treated income earned by an employee required to work at a temporary worksite because of the emergency as being earned at the employee's principal place of work." Muryn said it's unfair to change the rules now. "We agree that including this provision at the end of the year makes sense, but we strongly disagree with changing the law to allow individuals, temporarily displaced by the pandemic, to retroactively file refunds," said Muryn. "This violates both the spirit and the intent of the temporary law that the Legislature unanimously passed last year and cities have been relying on to navigate the numerous challenges brought on by the pandemic." According to the Ohio Mayors Alliance, the local impacts of remote working on municipal budgets vary, but communities of all sizes could be significantly impacted by a significant shift to remote working. Cities are primarily funded through a local municipal income tax, which applies to both residents and nonresidents who commute to work. "I understand the concern, and desire, to ensure as many tax dollars are kept in citizens' hands as possible. The reality is that the pandemic completely turned the way citizens work, and where they work, on its head," said Muryn. "As a mayor, I understand that long term we need to adjust, however, the immediate concern is that the Legislature implemented a law to provide stability to communities and now they are retroactively changing their minds." She noted that Ohio's communities continued to provide services throughout the pandemic. "Forcing communities to refund dollars to taxpayers that are necessary to keep our communities maintained is going to stifle the ability of our communities to support economic recovery," she said. "Our mayors have made it clear that this provision will be detrimental to the fiscal health of their local communities and to the economic recovery of our entire state," said Keary McCarthy, executive director of the Ohio Mayors Alliance. "Our communities fully expect to feel the effect of future revenue impacts because of shifts in the workplace and they accept this reality, but moving the goalposts by allowing for retroactive refunds could greatly harm local communities as they work their way through the pandemic. We look forward to continued discussions with the House, Senate and governor's office." Muryn is a member of the Ohio Mayors Alliance, which is a bipartisan coalition of mayors in Ohio's largest cities that has been working to strengthen the partnership between state and local leaders since its formation in 2016. Grant: 419-427-8412