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Euclid council approves settlement with school board over shared income tax
Summary
The council voted to authorize a settlement with the Euclid Board of Education resolving a long-running dispute over interpretation of a shared-use agreement for municipal income tax revenue; the settlement allocates 30% of certain tax revenue to the school district beginning Jan. 1, 2025.
The Euclid City Council voted Monday to approve an emergency ordinance authorizing the mayor to sign a settlement agreement resolving a lawsuit with the Euclid Board of Education over the interpretation of a shared-use agreement for municipal income tax revenue.
Under terms described at the meeting, 30% of income tax revenue for residents who receive a tax credit for working outside the city will be distributed to the Board of Education, with that calculation effective Jan. 1, 2025. The settlement also says no administrative fees will be charged to the Board of Education for the city’s expenses; the Board will pay 16.49% of the collection costs incurred by the collection agent, and the city will pay the remainder. The shared-use agreement that has been in effect since 1994 remains in place.
Why it matters: The settlement resolves years of litigation and negotiation over how Euclid’s municipal income tax is shared between the city and the school district. City officials said the agreement avoids larger revenue losses for both the city and schools that could result from continued litigation.
Details and discussion: City staff presented the settlement terms to council but did not read a full settlement text into the public record during the meeting. Council members said the agreement was reached after multiple executive-session discussions earlier in 2025. One council member characterized the outcome as a fair path forward for both parties while noting some residents have sought elimination of the dual tax in the past.
Process and next steps: The ordinance was taken up as an emergency measure and passed on the council floor by roll call. The mayor is authorized to execute the settlement agreement consistent with the terms summarized during the meeting.
Ending: Council members said the full, signed settlement agreement will be executed and implemented per the effective date listed in the ordinance. The council adjourned after closing other agenda items.
