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Bill would require voter approval to change municipal reciprocity credits, witnesses say system imposes double taxation and compliance costs
Summary
HB 503 would require voter approval before a city or village can reduce or repeal municipal income tax reciprocity credits and would prohibit combining credit changes with tax‑rate questions on the same ballot; CPAs, business groups and a constituent testified the current system is complex and results in double taxation for many commuters and students.
House Bill 503 would require voter approval for changes to municipal income‑tax reciprocity credits and bar municipalities from combining credit changes with tax‑rate questions on the same ballot measure.
Greg Saul, testifying for the Ohio Society of CPAs, said HB 503 makes two administrative changes: requiring voter approval to modify or repeal reciprocity credits and prohibiting pairing credit changes with a rate increase on the same ballot question. Saul told the committee municipalities sometimes couple a rate increase with a change in reciprocity so the city will "get the revenue one way or the other," and argued the two issues should be separate votes. He referenced Ohio law requiring ballots for rate increases over 1% and directed members to the Revised Code provision cited in his testimony.
Brian Pereira of the Ohio Taxpayer Protection Coalition and Liz Baumgartner of the Ohio Chamber of Commerce supported the bill, saying it would add predictability for businesses and protect residents from double taxation. Pereira emphasized that Ohio’s municipal income‑tax system is unusual and imposes compliance costs; Baumgartner said unpredictable changes to reciprocity credits raise employer payroll compliance burdens.
Kelsey Jenkins, a Brimfield Township resident and recent college graduate, gave first‑hand testimony about double taxation while working in Columbus and living in Portage County. Jenkins said she received no offset from her home jurisdiction and called the experience "double taxation," arguing HB 503 would restore voter power over reciprocity changes.
Witnesses cited legal context: Saul and others referenced Ohio Revised Code provisions and past court decisions (including the U.S. Supreme Court Wynne decision on interstate credits and a 1965 Ohio Supreme Court case, Thompson) when explaining why credit law is complex and why state action or clearer voter control could help. Committee members questioned short‑term budget impacts on municipalities and emphasized that any reform should include transition planning for local governments that rely on commuter revenue.
The committee concluded the second hearing on HB 503 after multiple proponent witnesses and invited further study and potential drafting changes; no committee vote was recorded in this hearing.
