Written by Established in 1959 as a temporary tax to generate supplementary revenue at a rate of 0.60%, the city of Marion’s municipal income tax–which now stands at a rate of 2.00%– has grown to become both a permanent feature of the city’s finances, as well as the city’s primary source of revenue.
The most recent increase to the income tax rate came in 2013, when it was raised from 1.75% to 2.00%, following a vote by the citizens of Marion in November 2012 that passed 55.65% to 44.35%.
The municipal income tax is assessed on all earned income. If an individual receives Social Security, disability, pension income, unemployment or the like, he or she does not have to pay the income tax pursuant to the Ohio Revised Code.
Very little changed with Marion’s income tax policy for a period of ten years after the voter-approved increase to the rate.
However, a major change was made in June 2023.
At the behest of Councilman Ayers Ratliff (D-2nd Ward), the city of Marion increased the income tax credit received by city residents who work outside of the city and pay an income tax to another municipality.
When it was originally proposed in May 2023, Councilman Ratliff touted the measure as a way to provide tax relief to Marion’s residents.
Marion City Auditor Miranda Meginness expressed concern with the suggestion, as it would result in the loss of another revenue stream at a time when the city’s finances were in disarray and every penny counted.
Undeterred and confident in the city’s financial position, Councilman Ratliff did not feel that the city’s estimated loss of $300,000+ per year would do it any harm to the city’s finances in the long run. The city, in his opinion, could afford the change in policy and the reduction in revenue.
Prior to the change to the credit, if a resident of the city of Marion, who worked in, let’s say Grove City, had a taxable income of $50,000 per year, he would have to pay Grove City’s 2% income tax of $1,000. Marion, which also has a 2% income tax, would give him a credit for half (50%) the amount he paid to Grove City, leaving his income tax owed to Marion at $500.
The change made in June 2023, which went into effect for the 2023 tax year pursuant to Ordinance 2023-029, effectively cut the city of Marion out entirely. The individual in our example would still pay Grove City $1,000 in income taxes–but he’d receive full credit from Marion for the payment made to Grove City and not have to pay anything to his hometown.
Many of the city of Marion’s roughly 13,000 resident workers are employed outside of the city, so this change has been quite costly to the city when it comes to revenue.
Any decrease in revenue should have a corresponding decrease in expenditures. If you make less money, you have to stop spending as much.
That was never done.
Instead, the attitude was “we can afford it!” What’s another million over a three-year period?
Councilwoman Twila Laing (R-4th Ward), who serves as chair of the Finance Committee, attempted to bring this matter up some time ago, but her proposal to consider repealing the 100% tax credit and returning to a 50% tax credit did not make it past the other members of the Finance Committee and was, therefore, not brought before council for consideration.
And now, alas, the city finds itself in fiscal distress, a budget deficit, and having to make difficult decisions moving forward.
If the city of Marion is not in a position to significantly cut spending, it must increase revenue. Perhaps it’s time to consider revisiting the city’s income tax policy.
As they say, you can’t have your cake and eat it too.