Euclid's Shared Income Tax Status Remains in LImbo
The May issue of The Observer reported that there was a disagreement between the City of Euclid and Euclid Public Schools regarding how the shared income tax should be divided among the two parties.
As a reminder, Euclid is the only municipality in Ohio with a part of its income tax shared between the city and the school system. Passed in 1994, a tax of .85% is split between the City and Euclid City Schools. While the guidelines for what the City and schools get from the tax is outlined in an agreement signed by the City and the schools; what is not clear is how the shared tax is calculated taking into account the City’s income tax credit. Based on the ambiguity of the shared income tax as it relates to the City’s tax credit policy, the amount the City has been paying the schools has potentially been wrong since the tax’s inception.
In a request for an update, Matthew Brown, Treasurer of Euclid City Schools , stated that there is no change to the distribution rate of 16.49% that the City put into effect in March 2019 when the revenue sharing controversy came to a head. According to Brown, “The School District’s legal counsel is communicating with the City’s staff to understand their position on the change to how the shared municipal tax distribution was calculated.”
The 16.49% rate of payment is arrived at by taking the .47 percent promised to the schools and dividing it by 2.85 percent. As Brown stated, “This percentage is not formally documented as precedent moving forward but what the City has determined it should be.” The School District contends this is too simplistic of a view of the tax sharing plan and not an accurate reflection of the original agreement.
Euclid Law Director Kelley Sweeney commented that the City feels the 16.49% distribution is correct, but that the parties have not reconciled anything yet. No arbitration or legal proceedings have been undertaken yet.
Kurt Steigerwald
Someone who lives in Euclid, enjoys writing and wants to stay informed. My wife and I have two children and live in the northeast part of the City. We are active in many Euclid activities.