City ponders future budget concerns

By Dean Wright -

GALLIPOLIS — The Gallipolis City Commission discussed upcoming budgetary concerns Tuesday in possible anticipation of having to cut city services if other revenue gathering methods are not found.

According to city income tax department representative Ronnie Lynch, House Bill 5 was passed by the state Legislature and went into effect Jan. 1. It is a revamping of the tax code.

“There is a lot of grey area in it. As we’ve had the current revised tax code that was roughly 30 pages long, the currently revised one is more than 100,” Lynch said.

According to Lynch, he has spoken with colleagues that have sat in on tax code meetings and when the code was shown to different administrators, they might give three different opinions as to how the code could be applied. He feels the new tax code is not as well organized as it might be.

“It’s written so vaguely, a lot of people will interpret it in different ways. The courts will likely weigh in here and normally it sides with the taxpayer,” Lynch said.

Lynch said that a lot of the new tax laws potentially take more taxing authority away from the city and hand it to the state.

“Net loss carry forward will be phased in per House Bill 5 and we’ve (the city) not allowed a net loss carry forward,” Lynch said.

Net loss carry forward is an accounting technique that takes the year’s net operating loss for a business entity and applies it to future years’ gains so one can reduce tax liability. Because of this added technique with House Bill 5’s passage, the city is potentially looking at less revenue. If companies have a negative net operating income in one year but no positive negative net operating income in following years, the business could potentially reduce its tax expense for some of the years by applying a loss seen in the first year.

Because of House Bill 5, Lynch noted that nonresidential rental property owners could also apply losses from outside of their Gallipolis properties to the taxing process. The city could potentially lose a lot of money on rental properties this way because it has typically taken 1 percent of an individual’s gain on those properties.

“With House Bill 5, if we can’t come up with alternative ways to make money, (the city) may see a loss in services,” Lynch said.

City officials have stated they were discussing selling off landlocked properties and other such assets the city has or cannot make use of in hopes of alleviating some of the upcoming budgetary concerns. Seemingly, one of their main concerns seems to be the unknown amounts of money that will be acquired in future years with the implementation of House Bill 5 and how that will effect the city’s ability to handle its debt service.

If members of the public have suggestions for how the city could handle revenue issues or continue to maintain city services, call (740) 446-1789.

Dean Wright can be reached at (740) 446-2342, Ext. 2103.

By Dean Wright