Gahanna officials say they will appeal a Franklin County judge’s ruling Wednesday that Gahanna must repay to residents $13.2 million in overpaid taxes between 2009-2014.
The case started in 2012 when a Gahanna couple filed a class-action lawsuit against the city and its collection agency. Douglas and Karla LaBorde argued the city should have credited taxpayers for all of the income taxes paid outside Gahanna.
Gahanna currently gives its residents an 83.3 percent credit for taxes paid to other municipalities. The plaintiffs say the city’s tax code entitled residents who paid income taxes outside of Gahanna a 100 percent credit.
Franklin County Common Pleas Judge Kimberly Cocroft agreed with the LaBordes. She first ruled in their favor in 2014.
Gahanna mayor Tom Kneeland says the city disagrees and will appeal the ruling.
"We emphasize that we have correctly interpreted and consistently applied the earned income tax rate, you know, since inception,” Kneeland says.
Gahanna’s income tax started in 1976. While the city has never seen a tax increase, Issue 29 on next week’s ballot would raise the income tax for residents who live and work inside Gahanna. They now pay 1.5 percent, but that would go up to 2.5 percent if the measure passes.
Residents who work outside of Gahanna and pay taxes to another city would not pay any income taxes in Gahanna.
"Issue 29 has nothing to do with this case whatsoever,” Kneeland says. “Issue 29 is critical for our streets and infrastructure and our safety and the community in general."
Kneeland says the city is facing a $2.9 million funding gap for infrastructure and other needs. He explains that cuts in recent years to local government funds, and a drop in interest income due to the Recession, reduced Gahanna’s resources.