Columbus City Council Caps Operating Spending From Income Tax Reserve
The amended legislation establishes a ceiling on operating expenses from the reserve to protect debt service and the city's credit rating.
Columbus City Council approved as amended legislation on the use of the Income Tax Set Aside subfund on Nov. 2. With Councilmember Nicholas Bankston absent, eight members voted in favor of the motion made by Shannon Hardin and seconded by Nancy Day-Achauer.
The measure establishes a statutory ceiling for direct expenses from the subfund to steadily reduce operational draws, according to legislative records. Starting Jan. 1, 2027, miscellaneous non-personnel operating expenses paid from the subfund cannot exceed 90 percent of the total spent in that category during the prior fiscal year. The legislation also directs the City Auditor to classify all expenses incurred within the subfund dating back to Jan. 1, 2026.
Under the amended city code, at least 25 percent of all municipal income tax collections must be deposited into the subfund, with the first priority reserved for transfers to the debt retirement fund to cover principal, interest, and debt issuance costs on city bonds and notes. Operating withdrawals are permitted only after debt obligations are satisfied, at the request of the finance director and through council appropriation, and exclude personnel costs. At the close of each fiscal year, any remaining unencumbered cash in the subfund must be transferred to the debt retirement fund.
Since code revisions created the Income Tax Set Aside fund in 2019, direct expenses have consumed an increasing share of revenue rather than dedicating 25 cents of every dollar to debt service and capital planning, according to legislative records. The use of what is considered a reserve fund for ongoing operational expenses is inconsistent with generally accepted accounting standards and potentially places the city's credit rating at risk, according to legislative records. Council records also noted that using cash within the reserve for direct expenses rather than debt service inhibits the city's ability to pay down outstanding obligations or service additional debt through its capital portfolio.
Previously, Pique Media reported on initial council deliberations on Oct. 23 and reported plans to cap operational draws from the reserve on Oct. 29.
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Supporting evidence (2)
Columbus City Council approved as amended legislation on the use of the Income Tax Set Aside subfund on Nov. 2.
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Columbus City Council · 2954-2026 · To amend Chapter 362 of the Columbus City Codes on the use of the Income Tax Set Aside subfund. ($0.00) Columbus City Council · 2954-2026 · To amend Chapter 362 of the Columbus City Codes on the use of the Income Tax Set Aside subfund. ($0.00) Recorded action: Approved as Amended A motion was made by Shannon G. Hardin, seconded by Nancy Day-Achauer, to Approved as Amended. The motion carried by the following vote: Result: Pass · Mover: Shannon G. Hardin · Seconder: Nancy Day-Achauer Nicholas Bankston: Absent Lourdes Barroso De Padilla: Affirmative Nancy Day-Achauer: Affirmative Rob Dorans: Affirmative Melissa Green: Affirmative Emmanuel V. Remy: Affirmative Tiara Ross: Affirmative Christopher Wyche: Affirmative Shannon G. Hardin: Affirmative {Body=Columbus City Council, Content type=Outcomes, Document coverage=API text and document metadata; linked PDF bytes are not retained, Local time=5:00 PM, Location=City Council Chambers, Rm 231, Meeting date=2026-11-02T00:00:00, Municipality=columbus}
With Councilmember Nicholas Bankston absent, eight members voted in favor of the motion made by Shannon Hardin and seconded by Nancy Day-Achauer.
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Columbus City Council · 2954-2026 · To amend Chapter 362 of the Columbus City Codes on the use of the Income Tax Set Aside subfund. ($0.00) Columbus City Council · 2954-2026 · To amend Chapter 362 of the Columbus City Codes on the use of the Income Tax Set Aside subfund. ($0.00) Recorded action: Approved as Amended A motion was made by Shannon G. Hardin, seconded by Nancy Day-Achauer, to Approved as Amended. The motion carried by the following vote: Result: Pass · Mover: Shannon G. Hardin · Seconder: Nancy Day-Achauer Nicholas Bankston: Absent Lourdes Barroso De Padilla: Affirmative Nancy Day-Achauer: Affirmative Rob Dorans: Affirmative Melissa Green: Affirmative Emmanuel V. Remy: Affirmative Tiara Ross: Affirmative Christopher Wyche: Affirmative Shannon G. Hardin: Affirmative {Body=Columbus City Council, Content type=Outcomes, Document coverage=API text and document metadata; linked PDF bytes are not retained, Local time=5:00 PM, Location=City Council Chambers, Rm 231, Meeting date=2026-11-02T00:00:00, Municipality=columbus}
Supporting evidence (9)
The measure establishes a statutory ceiling for direct expenses from the subfund to steadily reduce operational draws, according to legislative records.
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To that end, this code change will effectively establish a ceiling for direct expense out of ITSA, the purpose of which is to steadily and consistently reduce what Council deems to be an inappropriate use of these funds.
Starting Jan. 1, 2027, miscellaneous non-personnel operating expenses paid from the subfund cannot exceed 90 percent of the total spent in that category during the prior fiscal year.
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After January 1, 2027, those expenses categorized under 362.013(2)(f) cannot exceed ninety (90) percent of the total expenses similarly categorized in the prior fiscal year during the current fiscal year.
The legislation also directs the City Auditor to classify all expenses incurred within the subfund dating back to Jan. 1, 2026.
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It shall be the responsibility of the City Auditor to determine the classification of expenses defined in subsection (2) of this section. The City Auditor shall categorize expenses incurred within the subfund since January 1, 2026.
Under the amended city code, at least 25 percent of all municipal income tax collections must be deposited into the subfund, with the first priority reserved for transfers to the debt retirement fund to cover principal, interest, and debt issuance costs on city bonds and notes.
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In any event, for each fiscal year, at least twenty-five (25) percent of all monies collected under Chapter 362 shall be deposited into a subfund of the general fund to be distributed for the following purposes and in the following order: (1) For transfer to the city's debt retirement fund, amount(s) sufficient, taking into account the current balance in the debt retirement fund, to provide for the payment of principal and interest due during the current fiscal year on bonds and notes issued by the city and other debt obligations of the city which are to be paid from the debt retirement fund and not from another source of funds, and to provide for the payment of costs of debt issuance.
Operating withdrawals are permitted only after debt obligations are satisfied, at the request of the finance director and through council appropriation, and exclude personnel costs.
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Following the continuing satisfaction of (E)(1), at the request of the Director of the Department of Finance and Management, and by council appropriation, for current fiscal year expenditures and advances, excluding personnel costs.
At the close of each fiscal year, any remaining unencumbered cash in the subfund must be transferred to the debt retirement fund.
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At the end of each fiscal year, for transfer to the city's debt retirement fund, such unencumbered cash as shall remain in the subfund following transfers or advances, encumbrances, and expenditures made pursuant to divisions (E)(1) and (2) of this section.
Since code revisions created the Income Tax Set Aside fund in 2019, direct expenses have consumed an increasing share of revenue rather than dedicating 25 cents of every dollar to debt service and capital planning, according to legislative records.
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However, since the code revision that created the Income Tax Set Aside fund (ITSA) was enacted in 2019, the city has seen an increasing reliance on the use of these funds for ongoing operating expenses. Rather than dedicating 25 cents of every dollar to debt service and capital planning, that amount has continued to decline as direct expenses out of ITSA consume an increasing share of the revenue.
The use of what is considered a reserve fund for ongoing operational expenses is inconsistent with generally accepted accounting standards and potentially places the city's credit rating at risk, according to legislative records.
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This practice has two severe downstream impacts. First, it potentially places the city’s credit rating at risk. The use of what is considered a reserve fund for ongoing operational expenses is inconsistent with generally-accepted accounting standards; rather, annual operational expenses should be supported by more appropriate funding sources.
Council records also noted that using cash within the reserve for direct expenses rather than debt service inhibits the city's ability to pay down outstanding obligations or service additional debt through its capital portfolio.
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Second, the use of cash within ITSA for direct expense, rather than on debt service, inhibits the city’s ability to more effectively manage its capital portfolio. Utilizing cash from the Income Tax Set Aside fund mitigates the city’s ability to more aggressively pay down outstanding debt or to service additional debt through the capital portfolio.
Columbus City Council Weighs Tax Reserve Changes and $3.93 Million Software Transfer
Supporting evidence (1)
Previously, Pique Media reported on initial council deliberations on Oct. 23 and reported plans to cap operational draws from the reserve on Oct. 29.
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Columbus City Council Weighs Tax Reserve Changes and $3.93 Million Software Transfer
Columbus City Council Moves to Cap Operational Spending From Income Tax Reserve
Supporting evidence (1)
Previously, Pique Media reported on initial council deliberations on Oct. 23 and reported plans to cap operational draws from the reserve on Oct. 29.
Read supporting passage
Columbus City Council Moves to Cap Operational Spending From Income Tax Reserve