Tracked Senate Bills – December 2017
Bricker & Eckler LLP
Federal Tax Cuts and Jobs Act (HR 1): While efforts to cut taxes and encourage job growth are generally applauded, the Tax Cuts and Jobs Act caused great concern for economic development professionals due to proposed negative treatment of Private Activity Bonds, Advance Refunding Bonds, Historic Preservation Tax Credits (HPTC) and New Markets Tax Credits. The bill was finalized December 20 and sent to President Trump for signature. Luckily, the main provisions of these programs were preserved but slight revisions were made that will be further studied. For example, a tweak to HPTC in the final bill repeals the 10% non-historic rehabilitation tax credit for non-residential pre-1936 properties, subject to transition rules. Credits from the HPTC program also apparently will now have to be used over 5 years. The centerpiece of the tax bill is a permanent 40% tax cut for corporations. Small businesses will also see their taxes shrink. The bill also lowers tax rates for individuals temporarily, while increasing the standard deduction and the child tax credit. However, because the bill also limits key tax deductions (example: reduction in deductions for state and local taxes), the impact on individuals will vary.
State Legislative Activity:
Oh Christmas Tree, Oh Christmas Tree: The final day of legislative session in Ohio was Wednesday, December 13, and true to form, the legislature chose several bills to serve as year-end “Christmas Tree” bills, so-called due to their being loaded with amendments (versus ornaments). HB 69, which mainly deals with amendments to Ohio’s TIF program (see below) was heavily loaded and passed through the full Senate early Wednesday. Later in the day, the House concurred in the amendments and approved the bill, and has been sent to Governor Kasich for signature. Major amendments added to HB 69 included the following:
- Funding for counties and local transit authorities of up to $80 million to make up for some of the funding lost due to the elimination of the Medicaid managed care organization (MCO) sales tax. Funding of $50 million will be disbursed in FY18, and up to $30 million in FY19;
- A change that clarifies biennial budget language on local sales tax levies by allowing for increments of 0.1 mills as well as 0.25 mills;
- A provision adding townships to the list of approved entities (counties and municipalities) which can enter into enterprise zone agreements with retail enterprises if a waiver from the applicable local school board is obtained, and
- The removal of a requirement that local governments seeking additional property tax revenue certify a resolution pertaining to the levy to their County Auditor. Certification will only be needed to the County Board of Elections.
Right-to-Work Constitutional Amendments: Rep. John Becker (R-Cincinnati) announced on December 18 that he was introducing six separate constitutional amendments that address right-to-work. More information will be provided once available.
Bills Being Tracked: Changes from last month are noted below in bold
SB 43 BUILDING CODES (Bacon, K.) This bill was introduced February 9 and would enable limited home rule townships to adopt building codes regardless of any similar codes adopted by the county in which the township resides. In introducing the bill, sponsor Representative Bacon said his proposal would let residents and businesses in certain limited home rule townships obtain building permits at the township level, which would be more convenient than seeking permits from county departments. The bill was referred to the Local Government, Public Safety & Veterans Affairs Committee, where several hearings have occurred.
SB 51 LAKE ERIE (Skindell, M., Eklund, J.) This bill, introduced February 14, would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement. The definition of “public improvement” would be expanded to include shoreline improvement projects, and funds from special assessments on property within the district could be used to pay for such improvement projects. It has been referred to the Senate Energy and Natural Resources Committee where several hearings have occurred. A third hearing occurred September 20, where two amendments were offered. The first, from ODNR was intended to ensure any property held in trust by the state is not taxed due to the creation of the district, and the second was to ensure that property owners impacted by the district are 100% on board with forming the district. It also modifies the bill to address instances when dealing with parcels controlled by homeowner or condominium associations.
SB 97 ECONOMIC DEVELOPMENT (LaRose, F., Yuko, K.) This is a companion bill to HB 122 and would establish a Regional Economic Development Alliance Study Committee to study the benefits and challenges involved in creating regional economic development alliances. It has been referred to the Senate Government Oversight & Reform Committee. A first hearing with sponsor’s testimony occurred June 21. Senator Frank LaRose (R-Hudson) said the idea behind the bill is that “our economic futures are tied together.” Collaborative regional economic development has been shown to benefit all participating entities.” The bill was referred to the Senate Government Oversight & Reform Committee on September 27, 2017. It has not yet had a hearing in this committee.
SB 113 FUEL TAX (Coley, W) Introduced in March and referred to the Senate Ways and Means Committee, this bill would levy an additional registration tax on passenger cars, noncommercial motor vehicles, and commercial cars and trucks beginning on January 1, 2020; authorize a per-gallon motor fuel retail price reduction for consumers that is equal to the state per-gallon motor fuel tax of $.28; and exempt each gallon of motor fuel that is sold at the reduced retail price from the state motor fuel tax. Sponsor’s testimony occurred on June 7, at which Senator Coley stated said his bill would “alter transportation infrastructure funding at the state level” by increasing registration costs and concurrently reducing the gas tax for consumers who pay those fees. A second hearing occurred September 20 with no testimony.
SB 114 COMMERCIAL VEHICLE TAX CREDIT (Hite, C.) Introduced in March, this bill was referred to the Ways and Means Committee where a first hearing occurred May 3. Bill sponsor Senator Hite said the state has between 7,000-8,000 transportation jobs unfilled due to challenges finding qualified drivers. His bill would create a business tax credit to cover some costs for training workers to fill those positions.
SB 123 PROPERTY TAX COMPLAINTS (Coley, B.) Introduced in April, this bill would limit the right to initiate most types of property tax complaints to the property owner and the county recorder of the county in which the property is located. It was referred to the Ways and Means Committee, where Senator Coley advised during sponsor’s testimony May 3 that the proposal is identical to his prior bill (SB85, 131st General Assembly) in that it would allow property tax complaints to be initiated only by property owners or county recorders. Senator Coley advised that school boards and other government entities file claims only to drive up property values. According to the sponsor, filings show that challenges resulting in lower valuations typically originate from property owners rather than those government entities. He said the bill would also help alleviate a current backlog of cases facing the Board of Tax Appeals.
SB 128 NUCLEAR ENERGY (Eklund, J., LaRose, F.) This bill was introduced April 6 and would establish the Zero Emission Nuclear Resource Program, which would create the zero-emissions credits, or ZECs, to be priced by the Public Utilities Commission of Ohio and purchased by distribution utilities with nuclear plants. Utilities would recover that cost through rate increases on consumers in areas with nuclear plants with the increase capped at 5% of June 2015 rates. The program would sunset in 16 years and run in two year cycles. Under the bill, should those two plants be sold or transferred the value of ZECs received is to be reduced by an amount equal to one-half the dollar amount of any net proceeds of the sale. That provision would not be in effect in the event of bankruptcy, according to the bill. The measure would require any company subject to the bill’s provisions with a headquarters in Ohio to maintain that headquarters and require plants receiving credits to maintain employment levels similar to that of nuclear energy resources constructed prior to 1990 in the United States with the same reactor type, similar nameplate capacity, and single-unit location. This is a companion bill to HB 178, and bill sponsor Senator John Eklund said sponsors in both chambers will continue their efforts to enlist more support both inside and outside of their caucus.
SB 131 TAX CREDITS (Dolan, M.) This is a companion bill to HB 173 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. The bill passed in the Senate May 24 and was introduced in the House May 25, where a hearing occurred June 6.
SB 132 TAX CREDIT (Dolan, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation and renewable energy resources. It was referred to the Ways and Means Committee, where a hearing occurred June 7.
SB 147 RURAL JOBS (Hite, C.) This bill would enact the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses. A similar provision inserted into the state budget bill was vetoed by Governor Kasich. SB 147 was referred to the Ways and Means Committee, where a first hearing with sponsor’s testimony occurred September 6. A second hearing with proponent testimony occurred September 27.
SB 176 MUNICIPAL TAXES (Jordan, K.) Introduced August 7, this bill would prohibit municipal corporations from levying an income tax on nonresidents’ compensation for personal services or on net profits from a sole proprietorship owned by a nonresident. It was referred to the Ways and Means Committee.
SB 184 WIND SETBACKS (Skindell, M.) Introduced August 31, this bill would return the minimum setback requirement for wind farms of five or more megawatts to the pre-HB 483 (130th General Assembly) 2014 requirements (1,125 feet from the blade tip to the property line). It was referred to the Energy & Natural Resources Committee where a first hearing occurred September 27.
SB 188 WIND TURBINE SETBACKS (Hite, C.) Introduced September 14 and labeled as a compromise measure, the bill would increase the setback requirements to a minimum of one and two-tenths times the total height of the turbine compared to the currently required one and one-tenth, but it would decrease overall setbacks by requiring a distance of at least 1,225 feet in horizontal distance from the exterior – rather than the property line as under current law – of the nearest, habitable residential structure. It would also strengthen notice requirements by requiring the Ohio Power Siting Board to create rules requiring public information meetings and public notice involving owners and tenants on property adjacent to a potential wind farm. It was referred to the Energy & Natural Resources Committee where two hearings have occurred.
SB 203 MUNICIPAL TAXATION (Dolan, M.) Introduced September 28, this bill would reinstate the municipal income tax “throw-back rule” used in apportioning business income among municipalities. The rule was only recently eliminated in HB 49 (the Budget Bill). The bill has been referred to the Senate Finance Committee.
SB 209 TAX EXEMPTIONS (Coley, B.) Introduced October 3, this bill would modify the conditions that determine the relative priority of property tax exemptions when a parcel subject to a tax increment financing arrangement concurrently qualifies for another exemption. It has been referred to the Senate Ways and Means Committee where a first hearing occurred November 9.
SB 224 SALES TAX (Eklund, J.) This bill would exempt from sales and use tax goods purchased by a foreign citizen or entity if the goods are in Ohio only temporarily for package consolidation before being delivered to a foreign address, and to declare an emergency. It was referred in Senate to the Finance Committee.
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