Likely state law may sink income tax in Etna Township
The Joint Economic Development Zone that Etna Township trustees put on the August ballot may have been gored by the state legislature this month.
House Bill 289 would outlaw such new zones, known as JEDZs, as of Jan. 1 and require tougher regulations for proposals awaiting approval - regulations that would make getting Etna Township's zone on the ballot unlikely.
"They've stacked the deck against us," said Etna Township Trustee John Carlisle.
The township's proposal would impose a 1.5 percent income tax on anyone working in the zone - 58 parcels covering about 1,500 acres - and a 1.5 percent tax on the net profits of any business operating in the zone over the next 99 years.
It would generate about $400,000 a year to help pay for infrastructure improvements in the western Licking County township. Those would begin with widening the Rt. 310 bridge over I-70, to be followed by widening Rt. 310 between the bridge and Rt. 40, the township's primary artery.
State law prevents townships from imposing an income tax. But they can join with a municipality - in Etna Township's proposal, that would be Reynoldsburg - to form a Joint Economic Development Zone, which requires the approval of township residents, or a Joint Economic Development District, which requires the approval of the majority of businesses in the district.
Opponents say the zones are tax grabs that put the businesses in them at a competitive disadvantage. Some say it's taxation without representation because most of the people who pay the tax don't live in the township and can't vote on creating the JEDZ.
Proponents say businesses rely on roads and bridges as much as or more than residents, and might do more damage, so why shouldn't they pay a little extra for the upkeep?
House Bill 289 was approved by the House 83-7 in February. After as many as 10 new JEDZ proposals cropped up across the state in an apparent effort to win approval before they might be outlawed, the Senate Finance Committee attached an emergency clause that allows the bill to become law as soon as the governor signs it.
The Senate passed the bill on Wednesday. It goes back to the House on Tuesday for confirmation of the Senate changes and is expected to be signed into law before July.
It would require, among other things, that any JEDZ proposed this year be approved by a review council. It would comprise the county auditor, a member of the public, a person affiliated with an economic-development organization that works on behalf of businesses in the proposed zone, and representatives of the four largest employers in the zone.
In Etna Township's case, those four business owners already have said they oppose the zone, as has the Licking County Chamber of Commerce.
"That's unprecedented, to have nonresident business owners tell me - an elected official - what our infrastructure needs are," Carlisle said. "I take it personal, and I take it as a slap in the face."
Because the bill probably will become law before the Aug. 5 election, Etna Township will have to pull its proposal from the ballot to have it reviewed. In the unlikely event that the council approved the proposal, the township might be able to get it on the November ballot.
The more likely fight, however, will be in court. A legal argument against the new law might be made by a township or townships with approved JEDZs that are pending, said Matt DeTemple, the executive director of the Ohio Township Association.
The argument might be that such agreements already approved by resolution constitute a contract; constitutional law prohibits after-the-fact legislation that impairs the obligation of a contract that was signed legally, DeTemple said.