Tipp council considers tax changes

By Cecilia Fox - cfox@civitasmedia.com

TIPP CITY — The Tipp City Council discussed proposed revisions to council rules and tax collections updates during their study session Monday night.

City Finance Director John Green provided an update on the passage of House Bill 5, which is aimed at standardizing and streamlining the collection of municipal income taxes.

“Some of it makes sense and some of it doesn’t,” Green said. According to Green, some changes could cost the city thousands of dollars, while others could be positive.

The changes could represent a loss of “home rule” authority, Green said. The city must enact code adopting the state’s new tax code or forfeit the right to collect local income taxes.

Another major change for the city is the mandate of a five year net operating loss (NOL). Which means that if you have a loss in 2017, you carry that loss forward against income gains for the next five years, Green said.

Because the city has never offered NOL, the income loss the city is difficult to calculate, but is estimated to be less than $200,000 per year, Green said.

“That’s the best guess,” he explained. “We generate about $450,000 from business income taxes, I think it’s a fair bet to say we’ll lose half of that.”

Other changes include a provision for small businesses. Businesses with an annual income of $500,000 or less would only be charged municipal income tax in the area they’re located in.

“I think it violates home rule provisions,” Council President Joe Gibson said, expressing his surprise that other communities have not taken some sort of legal action against municipal tax uniformity.

Gibson also updated council on the proposed revisions to the city’s council rules. Gibson and the city’s law director David Caldwell have undertaken a revision of council rules, the first comprehensive revision since 2002.

These proposed updates are aimed at clarifying issues in the current rules, streamlining processes, and provide more thorough guidelines for future councils, Gibson said.

To accomplish this, Gibson and Caldwell reviewed at older updates and looked at other city’s council rules.

One of the biggest changes would clearly delineate the differences between ordinances, resolutions, and motions and the situations in which they should be used.

Other proposed changes would clarify duties of council members and city staff during meetings and streamline the process for appointing members to city boards.

Gibson also suggested that council consider moving citizen comments from the end of the meeting to the beginning.

In other business, council approved supplemental appropriations and amended the traffic code.

Council approved an ordinance reducing the penalty for failure to file vehicle registration in order to reflect the latest state statute. The penalty will now be a minor misdemeanor, rather than a fourth degree misdemeanor.

By Cecilia Fox