This month, a new Ohio law takes effect, changing the way local income taxes are levied by cities around the state. It sets out what income may be taxable, and what types of income may not. In some cases, this results in a substantial loss of resources for Ohio communities that levy an income tax. These tax losses could lead to further budget consequences such as service cuts and tax increases. When combined with the significant loss of revenue that municipalities are already facing as a result of policy changes enacted by Governor Kasich and the legislature over the past four years, the potential impact to Ohio communities is staggering.
Last year, we estimated that the statewide impact to communities from House Bill 5 if it passes could amount to over $82 million per year. When combined with other cuts from the state over the past five years, we estimate that Ohio cities and villages will have $495 million less in their annual budgets to provide services to residents and businesses.