Ohio Tax: Group of Lorain residents fighting tax credit reduction

by Brad Dicken, 28 May 2010, LORAIN -- Five Lorain residents hope to gather enough signatures to get a measure on the November ballot that would overturn a December vote by City Council that cut the income tax credit for residents who work outside the city from 2 percent to 1 percent.

Former Lorain Law Director Michael Scherach said Council's nearly unanimous decision is unfair to people who call Lorain home, but work elsewhere.

"Double taxing the people who live here in the city and work outside the city because there aren't jobs in the city isn't the solution," Scherach said.

Scherach and his allies filed paperwork with Lorain City Auditor Ron Mantini on Friday, the first step in the process to get the measure they're proposed on the ballot.

Council passed the income tax credit reduction as an emergency measure, and that left residents without a chance to really oppose it, as they had previous efforts to reduce the credit, Scherach said.

"It was very unfair what they did and in bad faith," he said.

But city officials said the move was necessary to avoid layoffs and reduce the city's  deficit.

Mantini said reducing the tax credit was expected to generate about $1.5 million this year and could bring in about $2.2 million in future years.

He said more cities are moving away from giving full income tax credits as budgets grow tighter. He also said it isn't unfair because full income tax credits mean residents who work outside the city don't end up paying for things like police, fire and park services.

"You're getting all the services, but you're not paying for them," he said.

By approving the income tax credit reduction, Mantini said, the city was able to avoid laying off more than 30 police officers, firefighters and other city workers.

If the ballot measure passes, he said, the city would have to confront the possibility of laying off those employees again.

"We wouldn't have done it if it wasn't absolutely necessary," Mayor Tony Krasienko said.

Scherach and his allies will need to gather 1,820 signatures to get the measure on the ballot, and Scherach said they will get extra signatures before submitting the ballot initiative to Mantini, who will in turn hand it over to the Lorain County Board of Elections.

Krasienko said that if voters approve returning to the 2 percent income tax credit "it would devastate the city."

"What these individuals are doing is focusing on failure and preventing this city from moving forward," he said. "We need to start rebuilding this city."

Scherach said Lorain needs to focus on bringing in new businesses and jobs instead of forcing responsible residents to take on a larger tax burden. He said he's heard several people say they plan to move out of the city if the income tax credit reduction isn't eliminated.

"The city of Lorain can't afford to lose responsible citizens who have jobs and are paying their taxes," he said.