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Can Cincinnati continue to tax the income of remote workers?

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Posted at 11:22 PM, Jun 03, 2021
and last updated 2021-06-04 06:19:25-04

CINCINNATI — The city budget is finally balanced, but it took $67 million of American Rescue Plan funding to make it happen. On Thursday, at the first public hearing for Cincinnati’s 2022 budget, groups made their case to receive a portion of what’s left.

But members of council are still uncertain about the city’s financial future. Decisions made in Columbus could radically change Cincinnati’s plans.

The issue: "There is significant uncertainty in the short term regarding the extent of income taxes,” said assistant city manager Chris Bingham.

Earnings tax, which funds a majority of Cincinnati’s city budget, can usually only be collected from people working within city limits.

During the pandemic, Gov. Mike DeWine signed an order allowing Ohio cities to collect the tax from people working remotely for local companies while living elsewhere.

RELATED: Remote workers want to stop paying city income taxes

That measure isn’t permanent, however. And if people don’t return to working in-person, inside city limits, the tax revenue they generated for local government will be lost.

Worst of all, from a local government’s point of view: The Ohio House and Senate are considering bills that would require cities to refund the remote workers who paid earnings tax during the pandemic.

“It would be absolutely devastating for a city like Cincinnati that is so dependent on the earnings tax,” said Councilmember David Mann, who chairs City Council’s budget and finance committee.

But Cincinnati would also have time to plan. Mann said he and his colleagues are ready to use American Rescue Plan money to fill the tax gap this year and next if necessary.

“It’s not like the money disappears the next day” if a new bill is passed, Mann said. “One of the things we did when we made estimates about how to use the stimulus money was to increase our contingency because of those issues.”

The city budget must be finalized and approved by the end of June.