Tracked House Bills – November 2017
Bricker & Eckler LLP
State Legislative Activity:
Tax Expenditure Review Committee: The legislature’s Tax Expenditure Review Committee held its first meeting October 17. The Committee was formed through legislation passed last session (HB9, 131st General Assembly).
Sen. Scott Oelslager (R-N. Canton), who was selected as chairman during the meeting, noted afterward that the panel is charged with reviewing the tax expenditures only once every eight years. As for a schedule moving forward, he said he is seeking input from members on that and other related subjects. The other committee members are: Sen. John Eklund (R-Chardon), Sen. Vernon Sykes (D-Akron), Rep. Tim Schaffer (R-Lancaster), Rep. Gary Scherer (R-Circleville) and Rep. John Rogers (D-Mentor-on-the-Lake).
Helping members kick off the committee’s work was Tax Commissioner Joe Testa, who presented a broad overview of the Tax Expenditure Report (the “TER”) which is produced along with the executive budget proposal every two years. The latest TER, which covers the Fiscal Year 2018-2019 biennium, contains estimates for 129 tax expenditures spread across nine different taxes, the tax commissioner said. The total for the current year of the budget cycle is about $9.1 billion.
Mr. Testa said it made sense to have a regular “public airing of expenditures” that includes having their beneficiaries come in and make their case for continuation.
Bills Being Tracked: Changes from last month are noted below in bold
HB 10 CROWDFUNDING (Arndt, S.) This bill was introduced in the House February 1 and would permit intrastate equity crowdfunding under certain circumstances. The bill would provide an exemption from registration under the Ohio Securities Law for certain crowdfunding initiatives. The bill passed in the House on June 21 and was referred in Senate (6/28/2017) to the Transportation, Commerce & Workforce Committee. The Committee held its first hearing with sponsor testimony September 6. A second hearing with proponent testimony occurred October 11.
HB 53 UNION DUES/RIGHT TO WORK (Becker, J.) This bill was introduced in mid-February by Representative Pete Becker from Clermont County. Co-sponsors include Representatives Hood, Brinkman, Dean, Thompson, Vitale, Goodman, Riedel, Roegner, Merrin, Antani, Zeltwanger and Keller. It would remove any requirement under the Public Employees Collective Bargaining Law that public employees join or pay dues to any employee organization, prohibit public employers from requiring public employees to join or pay dues to any employee organization and prohibit an employee organization from being required to represent public employees who are not members of the employee organization. The bill was referred Feb. 14 to the House Finance Committee. No hearings have yet occurred.
HB 69 TIF DISTRICTS (Cupp, R.) This bill would require reimbursement of certain township fire and emergency medical service levy revenue forgone because of the creation of a municipal incentive district tax increment financing district. The board of township trustees may, by resolution, waive the application of the reimbursement or negotiate with the municipal corporation that created the district for a lesser amount of payments in lieu of taxes. The reimbursement requirement only applies if:
- An incentive district TIF is being created;
- The affected township provides fire and emergency medical services to the territory of the TIF;
- The TIF is being created by a municipality by legislation adopted after the effective date of H.B. 69, and
- The levy in question was approved by voters on or after January 1, 2006.
Under the bill, the board of township trustees may, by resolution, waive the reimbursement or negotiate with the municipality that created the district for a lesser amount of payments in lieu of taxes.
A “TIF” refers to Tax Increment Financing, a mechanism that exempts some portion of increases in property value from property taxation. Instead, property owners make service payments in place of taxation that are directed to pay public infrastructure costs.
Incentive district TIFs (the kind affected by this bill) are generally used for projects that involve single-family residential development, including condos. Commercial TIFs, on the other hand, are usually formed as what is known as a Parcel TIF, in which the territory includes specified, defined parcels. Most future commercial TIFs are therefore unlikely to be affected by HB 69.
The bill was referred to the House State and Local Government Committee, where numerous hearings have occurred. The bill passed in the House June 21, and on June 28, it was referred in the Senate to the Ways & Means Committee, which held its first hearing with sponsor’s testimony September 6. On October 4, a fourth hearing with Opponent’s Testimony was held. Tom Hart, legal counsel of the Building Industry Association of Central Ohio, said in written testimony the legislation is an attempt to erode TIF law and will have unintended consequences. He said the bill could make it more difficult to build affordable housing in central Ohio and “amounts to unilateral disarmament in the face of stiff challenges from regions and states we compete against.”
A 5th Hearing occurred October 11, and the bill was amended to add language allowing for amendments to Joint Economic Development Zones so residents of affected townships aren’t subject to double income taxation. A 6th Hearing with 6th-All testimony-Possible amendments & vote is scheduled for November 29 in the Ways and Means Committee.
HB 102 SCHOOL FUNDING (Brenner, A.) This bill, introduced March 1 and referred to the House Finance Committee, would replace locally levied school district property taxes with a statewide property tax and require recipients of certain tax exemptions to reimburse the state for such levy revenue lost due to those exemptions. It would also increase the state sales and use tax rates and allocate additional revenue to state education purposes; to repeal school district income taxes; require the Treasurer of State to issue general obligation bonds to refund certain school district debt obligations; create a new system of funding schools where the state pays a specified amount per student that each student may use to attend the public or chartered nonpublic school of the student’s choice, without the requirement of a local contribution; eliminate the School Facilities Commission; eliminate the Educational Choice Scholarship Pilot Program, Pilot Project Scholarship Program, Autism Scholarship Program, and Jon Peterson Special Needs Scholarship Program; eliminate interdistrict open enrollment; require educational service centers to transport students on a countywide basis, and permit school districts to enter into a memoranda of understanding for one district to manage another. It was referred to the House Finance Committee, and a June 20 hearing was continued.
HB 114 RENEWABLE ENERGY (Blessing, L.) This bill, introduced March 8, is very similar to last year’s HB 554 except it would: convert the renewable energy standards to goals indefinitely, rather than for a two year period; permit residential customers of a distribution utility or electric services company to opt out of any rider, charge or other recovery mechanism designed to recoup the cost of renewable energy; clarify that renewables are bypassable charges, rather than nonbypassable charges, and specify that the 12.5% renewable energy goal to be attained by 2027 will end at that time and not continue indefinitely. The bill passed in the House March 30 and moved to the Senate, where it was referred to the Energy and Natural Resources Committee. A third hearing with opponents’ testimony occurred October 14. Opponents – including environmental, faith, and clean energy groups – urged lawmakers to scrap the bill, which they say will drive away investment in the state and curb job creation. “Large employers are increasingly adopting clean energy sourcing policies and therefore want to locate in areas where clean power is available locally,” said David Zak, CEO of the Seneca Industrial and Economic Development Corporation. “Providing clean power to these companies is a very significant economic opportunity.”
HB 122 ECONOMIC DEVELOPMENT (Hambley, S., Rogers, J.) Introduced March 9, this bill would establish a Regional Economic Development Alliance Study Committee to study the benefits and challenges involved in creating regional economic development alliances. Senate Bill 97 is a companion to this bill and is the more likely bill to be approved by both chambers of the legislature. The bill is relatively simple in that it creates a study committee to look at the pros and cons to establishing regional economic development alliances. The committee is made up of 3 members of the House; 3 members of the Senate; the Governor, or his designee; 2 persons from academia engaged in a relevant field of study (appointed by the co-chairs of the committee); 2 economic development professionals (appointed by co-chairs of the committee); and the chair of the Regional Prosperity Initiative (or their designee) as a nonvoting member. Specifically the committee is charged with studying enhancing collaboration for successful regional economic development; shared services; and also the mobilization of resources among alliance members. The committee is directed to consult with county commissioners, township trustees, city councils and mayors, members of statewide and regional organizations that represent political subdivision, and members of chambers of commerce. The bill was reported out of House Committee May 10 and passed in the House September 13. It was referred to the Senate Government Oversight & Reform Committee on September 27, 2017. It has not yet had a hearing in this committee.
HB 155 COMMERCIAL VEHICLE TRAINING (Sprague, R., Howse, S.) This bill was introduced March 23 and would authorize a nonrefundable tax credit to be taken against either personal income tax or commercial activity tax liability for expenses incurred by an employer to train a commercial vehicle operator. Under the proposed program, employers would submit to the Director of the Development Services Agency, by December 1, eligible training expenses expected to be incurred during the next calendar year. The ODSA Director would then certify up to $50,000 per employer of such expenses as being eligible for tax credits. After incurring eligible training expenses, employers could then apply to ODSA for tax credits in amounts equal to one-half of the incurred eligible expenses. On May 1, it was referred to the House Ways & Means Committee, where a hearing with sponsor’s testimony occurred May 16.
HB 166 WORKFORCE DEVELOPMENT (Reineke, B., Cupp, R.) This bill would revise the laws governing the state’s workforce development system, programs that may be offered by primary and secondary schools, certificates of qualification for employment, and the Opportunities for Ohioans with Disabilities Agency, and to designate the first week of May as In-Demand Jobs Week. The next hearing, still to be scheduled, may be the 6th Hearing-All testimony- with a possible vote.
HB 173 TAX CREDITS (LaTourette, S., Patton, T.) This bill was introduced April 5 and would provide that compensation paid to certain home-based employees may be counted for purposes of an employer qualifying for and complying with the terms of a Job Creation Tax Credit. It was referred on May 1 to the House Ways & Means Committee, and a first hearing with Sponsor’s testimony occurred May 9.
HB 178 NUCLEAR ENERGY (Devitis, T.) This is a companion bill to SB 128 (see explanation there) and was introduced April 10. It was referred to the House Public Utilities Committee, where several hearings have occurred. Sponsors in both chambers are continuing conversations with interested parties in order to earn support for these bills. Representative Robert Cupp recently assumed the role as Chair of the House Public Utilities Committee and confirmed that talks are still ongoing. Additionally, House Speaker Rosenberg recently appointed members to an ad hoc House task force charged with studying this bill and other energy issues in the coming months (Speaker’s Task Force on Energy Policy).
HB 203 SUMMER JOBS (Barnes, J.) This bill was introduced May 9 and would require the Director of Development Services to establish a youth summer jobs pledging initiative to increase access to summer employment opportunities for high school and college youth. It was referred to the Higher Education and Workforce Development Committee, where the second hearing with proponents’ testimony occurred September 20.
HB 281 BROADBAND EXPANSION (Carfagna, R.) This bill, introduced June 20, would establish the residential broadband expansion program within the Development Services Agency to award matching grants for last mile broadband expansion in municipal corporations and townships and to make an appropriation. It was referred to the House Finance Committee, where the first hearing with sponsor’s testimony occurred September 20, 2017 and a 2nd Hearing is scheduled for November 28 at 9 am.
HB 292 OHIO RESIDENCY (Scherer, G.) Introduced June 27, this bill would modify the test for determining an individual’s state of residence for income tax purposes. The bill would add to the requirements to prove out-of-state residency by requiring a showing that the applicant did not: 1) claim a federal depreciation deduction (which is available only for property used in business or held for the production of income — e.g., as rental property) for an abode located outside the state, which the person was required to have for the entire taxable year under current law; 2) hold a valid Ohio driver’s license or identification card; 3) receive the benefit of an Ohio homestead exemption or 4. receive a tuition discount based on residency for attending an Ohio institution of higher education. The bill passed in the House November 1 and now moves to the Senate, where it was referred to the Ways and Means Committee.
HB 342 TAX LEVIES (Merrin, D.) Introduced September 11, this bill would permit local tax-related proposals to appear only on general and primary election ballots and not on an August special election ballot and would also modify the information conveyed in election notices and ballot language for property tax levies.
HB 371 PROPERTY TAX (Merrin, D.) This bill, introduced October 4 would exempt from property taxation the increased value of land subdivided for residential development until construction commences or the land is sold. The bill would benchmark an “ascribed taxable value” of the newly subdivided parcel, and any increase in taxable value would be exempt from taxation until either (1) Construction of a residential building on that property commences, or (2) Title to the property is transferred for consideration by a qualifying owner to another person. The construction of streets, sidewalks, curbs, or driveways or the installation of water, sewer, or other utility lines on a subdivided parcel would not cause construction of a residential building to commence for purposes of the bill. Two hearings have occurred in the House Ways and Means Committee, and an interested party meeting occurred November 16. A 3rd Hearing with Proponent/Opponent and Interested Party testimony is scheduled for Tuesday November 28 at 9 am in the House Ways and Means Committee, Room 121.
HB 378 BROADBAND GRANTS (Smith, R., Cera, J.) This bill, introduced October 10, would create the Ohio Broadband Development Grant Program within the Development Services Agency and would provide funds to extend broadband service to unserved areas of the state. The program would provide incentives for competing providers of telecommunications service to provide advanced, high-quality telecommunications service construction of broadband infrastructure to serve unserved areas. Construction shall include the acquisition and installation of middle-mile or last-mile infrastructure, grant project planning, obtaining construction permits, construction of facilities, purchasing equipment, and installation and testing of the broadband service. Those eligible to apply for grants include Private businesses, Political subdivisions, Nonprofit entities organized to provide telecommunications services and Co-ops organized to provide phone and internet services. Grant amounts awarded under section shall not exceed the lesser of Fifty per cent of the total project cost or Five million dollars. A hearing is scheduled for 9 am November 28 in the Finance Committee.
HB 381 ZERO EMISSIONS (DeVitis, A.). This is a third bill to propose the creation of a zero-emission nuclear credit program to benefit Ohio’s nuclear plants and is very similar to HB 178. However, one of the major differences is new language capping a residential customer’s monthly nonbypassable charge at $2.50 and capping a nonresidential customer’s monthly charge to be the lesser of $3,500 or 5% of the total bill. It also downsizes the lifespan of the ZEN program – terminating the credits after 12 years on Dec. 31, 2030, unless extended by the General Assembly. HB178 would terminate the program after 16 years. Other changes include requiring the Public Utilities Commission to conduct an inquiry in 2029 to determine if continuing the program is in the public interest, and removing language from HB178 requiring a PUCO evaluation during years six and 11 of the program. It has been referred to the House Public Utilities Committee.
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