City Money Athens is suing the state of Ohio over control of local taxes By Maggie Prosser Posted on December 5, 2017 4 min read 0 0 328 Court Street in Athens, Ohio in August 2017. File Photo by Connor Perrett. A complaint against the state of Ohio was was filed last month over House Bill 49. Athens is the leading plaintiff in the suit. The city of Athens is the head plaintiff out of 137 Ohio municipalities in a lawsuit against the state over a bill that could lead to state control of local taxes. A provision of Gov. John Kasich’s two-year budget House Bill 49 allows business owners to file net-profit income-tax returns with the state instead of its municipality. Under this provision, the Ohio Department of Taxation can collect local businesses’ taxes while charging municipalities. Athens officially joined the suit in October and is now the leading plaintiff of 17 cities filing the legal action. More than 100 other cities have pledged to support the lawsuit. The provision would cause declines in revenue for businesses, some city leaders said. State leaders have said the bill would streamline tax-filing for business owners. Municipalities have argued that House Bill 49 violates an article of the Ohio Constitution called “the Home Rule Amendment.” This amendment ensures municipalities have the authority to exercise local self-government, which includes collecting taxes from local businesses. House Bill 49 would usurp municipalities’ ability to self-govern, administer, audit and receive net profit taxes. Kent M. Scarrett, the Executive Director of the Ohio Municipal League, said independent revenue is key for municipalities while testifying before the Ohio Senate Finance Committee. “In Ohio, our municipalities are blessed with the ability to administer their own tax system, which gives our cities and villages the ability to serve their constituents better,” he said. “The independence of revenue sources is the most fundamental element to any institution; business, governmental, family or otherwise.” Athens Tax Administrator Tina Timberman testified against the bill before the House Ways and Means Committee. She said the bill could cost Athens $100,000 in lost revenue. “Simplicity is not what they accomplished,” Timberman said in an interview with WOUB. “Small business owners won’t be able to figure it out.” The complaint was filed Nov. 16, 2017, and names the State of Ohio, Ohio Tax Commissioner Joe Testa, Ohio Treasurer Josh Mandel and Director of Budget and Management Tim Keen as defendants. Scarrett said the new system will complicate and confuse tax filing systems. “The Tax Commissioner claims this alternative is a ‘win-win’ for businesses and municipalities alike,” he said. “The League disagrees with this assessment.” Frost Brown Todd LLC will be representing the 137 plaintiffs in the lawsuit.