Tracked House Bills – May 2023
135TH GENERAL ASSEMBLY – PROPOSED & ENACTED LEGISLATION
(Changes from last month are noted in italics):
HB 1 PROPERTY/INCOME TAX (Mathews, A.) Introduced on February 15, 2023, this bill modifies existing law regarding property taxation and income tax rates. The bill is designed to flatten Ohio’s personal income tax by eliminating various brackets and instead impose a rate of 2.75% on income over $26,050.
Specifically, the measure makes an important change to Ohio’s real property taxation scheme: it would reduce taxable value to 31.5% of true value (under current law, all real property is taxed at 35%, known as its “assessed value”). (See proposed change to R.C. 5715.01(B)) Further, the Ohio Tax Commissioner is charged with making an annual calculation based a Gross Domestic Product (GDP) “deflator,” meaning that taxable value (i.e., assessed value) could be no higher than 31.5%, but could be lower, with no floor established.
On April 25, the House Ways & Means Committee held its seventh hearing on the measure.
HB 2 ECONOMIC GROWTH AND DEVELOPMENT (Cutrona A., Upchurch, T.) Introduced on February 15, 2023, this bill declares the intent of the General Assembly to direct state funds to projects across the state for economic growth and community development
HB 3 AFFORDABLE HOUSING (Mathews, A.) Introduced on February 15, 2023, this place-holder bill initially stated only that it is the General Assembly’s intention to authorize an affordable housing tax credit. On March 14, a substitute version of this bill was accepted by the House Economic & Workforce Development Committee.
Specifically, this measure will authorize a state LIHTC tax credit, up to $50MM, to piggyback off the federal credit, and it will incorporate OTAX-recommended language to address implementation hiccups.
Rep. Pavliga said the federal incentive includes a 9% credit and 4% credit. The former is awarded competitively, while the latter is financed in part through tax-exempt bonds. The sponsor noted the latter’s allocation of volume cap bonds (approx. $120MM) for multi-family development often goes unused due to a lack of interest by private developers.
On March 28, the House Economic & Workforce Development Committee held its fourth hearing.
HB 23 TRANSPORTATION BUDGET (Edwards, J.) Introduced on February 15, 2023, this is the State’s transportation bill, thereby appropriating $13.5B for programs during the State Fiscal Year (SFY) 2024 – SFY 2025 biennium.
An amended substitute cleared the entire House on March 1; on March 23, the Senate passed a substitute version of the bill adopted in its Transportation Committee. Differences between the two versions were hashed out in Conference Committee, with both chambers adopting the final version of the bill on March 29. The Governor signed the bill into law on March 31, 2023.
(Interestingly, the Senate’s substitute version removed the House’s approved language that would have created a $1B new Rural Highway Fund. The Senate viewed the $1B as needing to remain in the General Revenue Fund; analysis showed the Fund would only apply to a dozen or so projects across Ohio (OEDA provided in-person testimony and written support to restore this $1B appropriation). And the Senate version removed a provision that would have prohibited park district property from being included in SIDs.)
Appropriation line items of interest:
Among its provisions, this bill appropriates:
- $15.2MM/year to ODOD for 629 Roadwork Development Grants
- $124.6MM during the biennium to the Public Works Commission for the Local Transportation Improvement Program (LTIP)
- $10MM to Ohio’s six Regional Transportation Planning Organizations (RTIPs) for a rural transportation planning grant program
Substantive law changes of interest:
The enacted bill changes Ohio law as follows:
- ODOT Director (or designee) to serve as chair of the Ohio Rail Development Commission, not a Governor’s appointee; this change in board governance must occur by Oct. 21, 2025; Governor instead to appoint an additional member of the general public to the Commission
- ODOT must submit regular expense reports to the General Assembly leadership as to loans and grants (e.g., 629 Roadwork) issued by ODOT
- State Infrastructure Bank (SIB) loans made to a “small city” (i.e., 5,000 – 24,999 population, located outside of a metropolitan planning organization) must carry 0% interest. (Compare: current interest on SIB loans is 3%, with terms of up to 30 years.)
- ODOT must receive approval from the Controlling Board prior to spending any federal Infrastructure Investment and Jobs Act (IIJA) funds for EV charging stations
- Enable multiple regional transit authorities to collaborate in providing workforce transit among territories to and from economically significant employment centers
- Require ODOT to construct an interchange on I-71 near Brunswick-Strongsville (i.e., the Cuyahoga and Medina Counties’ line) – note Governor DeWine expressed concern with this item (although he did not line-item-veto the provision)
- Mandate that trains operate with two-person crews
- Analyze transportation links between Columbus and Sandusky as part of ODOT’s $10MM Strategic Transportation and Development Analysis, which must be completed by Dec. 31, 2024
- Allow for Amtrak to build and provide rail service along corridors identified by the state, which is studying the feasibility of two potential corridors, including (i) to connect Cincinnati, Dayton, Columbus and Cleveland, known as the “3C+D Corridor” and (ii) connection between Cleveland and Detroit with a stop in Toledo.
- Allows for the sale to Norfolk Southern of the Cincinnati Southern Railway, the only municipally owned railroad in America
HB 33 OPERATING BUDGET (Edwards, J.) Introduced on February 15, 2023, this is the State’s biennial budget bill, for SFY 2024 – SFY 2025.
On April 17, the House Finance Committees released a substitute version of the bill, and the Committee issued additional amendments to the bill on April 24, which was approved by the entire House on April 26. Since that time, the bill has been heard once in the Senate Finance Committee, with all Senate-requested amendments to the measure having been due by May 17. Thereafter, the Senate’s own substitute version is expected to be published on June 6.
Appropriation line items of interest (at pages 4917 to 4941):
Among its provisions, this bill appropriates:
- The House Finance Committee adjusted the Governor’s proposed $2.4B for the All Ohio Future Fund, to be funded via “accumulated one-time GRF,” by divvying-up that initial figure as follows:
- $500MM to the Ohio Future Fund for site-readiness and preparation for large economic development projects, similar to the recently announced Intel project
- $350MM to Ohio’s Brownfield Remediation Program during SFY 2024 and 2025
- $150MM to the Ohio Demolition and Site Revitalization Program during SFY 2024
- $40MM to the Rural Industrial Loan Park Fund during SFY 2024 and 2025
- $267MM to ODOD of the State’s ARPA allocation for “Capital Projects.”
- $1B to ODOT’s Connect4Ohio Fund, the new name of the proposed rural highway fund (which had been proposed in the state’s Transportation Bill (HB 23), but had been removed by the Senate), and defines eligible “rural” counties as those lacking a city with 65,000 population or more.
- The House appropriated $24MM under ODOT’s Connect4Ohio program in total funds in SFY 2024 for local road construction, in Licking County and the Cities of Newark, Johnstown, and Heath
- $20MM to the Foundation for Appalachian Ohio.
- $500,000 during SFY 2024 and 2025 for the Center for Advanced Manufacturing and Logistics
Substantive law changes of interest:
The bill would change Ohio law as follows:
- New Community Authorities, in R.C. Chapter 349, expanded to include certain townships as organizational boards of commissioners in creating NCAs.
- Tax increment financing law (R.C. 5709.40, R.C. 5709.73) tweaked to remove exemption status from any “nonperforming parcels,” which are TIF’ed parcels for which PILOTs are required to be made, but for which no such payments have been received since the TIF commenced. And once removed from the previous TIF, those “nonperforming parcels” then can be included in another TIF.
- TIF law further tweaked to allow municipalities to extend, by another 15 years, the exemption period of certain incentive district TIFs – approved prior to January 2006 – beyond the 30-year cap under current law (R.C. 5709.40(C)); the extension may be by amending the original enabling ordinance.
- Creates new tax exemption authority for “pre-residential development property” (NEW R.C. 5709.56), by exempting unimproved land – subdivided for residential development. Exemption available for up to eight years, or until construction begins or the land is sold. (Does not apply to land already subject to a TIF.)
- The State’s “bare minimum” notice requirements (R.C. 5709.83) are tweaked to remove references to in-person meetings between a CRA housing officer and impacted school districts.
- Enables townships and municipalities to levy special assessments on real property in the context of OAQDA-financed projects, upon request by the property owner.
- Drops HB 3’s authorization of a state LIHTC tax credit, here up to $100MM/state fiscal year, that piggybacks on the federal LIHTC credit, with implementation by OHFA of such state program.
- Alters the Ohio Rural Industrial Park Loan Program to allow developers which had previously received such assistance (during past budget biennia) to apply for and receive additional assistance; caps all loans under the program at $4MM.
- Eliminates the authority of local governments to levy replacement property tax levies, beginning with elections held on or after January 1, 2025.
HB 85 LAND BANKS (Patton, T.) Introduced on February 28, 2023, this bill seeks to expand the methods by which land banks can acquire delinquent property. HB 85 would amend an existing section in R.C. Chapter 5721 and enact two new sections to R.C. Chapter 5722. This bill is in direct response to recent cases decided in federal and state courts that suggested “takings” are occurring under the U.S. Constitution’s Fifth Amendment; the bill is intended to fix state law to avoid such prohibited outcomes.
Specifically, the bill does the following:
- Changes R.C. 5721.191 as to how tax-foreclosed properties are advertised and sold; inserts county Boards of Revision (BOR) as appropriate venues for tax foreclosure cases; and, requires that advertisements for the sale of tax-foreclosed property state that land banks have right of first refusal to match the highest bid offered
- Creates new R.C. 5722.032 to provide an alternative way to send abandoned property to land banks – via sale to such land banks without advertisement, so long as the amount they pay is the greater of the amount of delinquent taxes or the property’s FMV; those with interests in the property may claim any excess proceeds from such sale (i.e., the potential “taking” of home equity), and if nobody claims any interests in the property, the land bank may buy the property for only the amount of the delinquent taxes due
- Creates new R.C. 5722.033 to provide land banks with the right of first refusal in any sheriff’s sale of tax-foreclosed abandoned property, whereby the land bank is empowered to match, within 30 days, the highest bidder at such sale
On May 9, 2023, the bill had its second hearing in the House State & Local Government Committee, during which the Cuyahoga County Land Bank provided support testimony to allow land banks to acquire properties by paying the full amount of the taxes, or the value of the property, and affording the tax-delinquent owner the right to require the property to be exposed to a sale.
HB 96 MINIMUM WAGE (Jarrells, D., Mohamed, I.) Introduced on March 7, 2023, this bill seeks to increase the state’s minimum wage.
HB 121 MUNICIPAL INCOME TAX (Robb Blasdel, M., Mathews, A.) Introduced on March 21, 2023, this bill allows businesses with remote workers to use a modified municipal income tax apportionment formula.
On May 16, the House Ways & Means Committee held its fifth hearing on the measure allowing for an opt-in method by businesses in Ohio to consolidate and simplify tax filings for remote workers. At that hearing, the Committee adopted an amended version of the bill to, in part, remove any requirement for employers to notify municipalities in which work-from-home workers are living and working.
HB 153 ABANDONED LAND (Hillyer, B.) Introduced on April 18, 2023, this bill seeks to limit which “abandoned land” – as defined in Ohio’s land banking statutes (R.C. Chapter 5722) – may be subject to certain expedited foreclosure proceedings. Specifically, this bill changes land banking law in response to complaints winding through federal and state courts asserting that land banks are engaging in “takings” under the Fifth Amendment to the U.S. Constitution; that direct transfers to land banks of abandoned land are “taking” any pent-up equity in property value still held by the tax delinquent land owner.
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