Tracked Senate Bills – February 2018
Bricker & Eckler LLP
Federal Infrastructure Plan: President Trump released his long-awaited infrastructure plan on February 12. The proposal apparently would leverage $200 billion in federal dollars, matched by cuts elsewhere in the overall federal budget, to achieve $1.3 trillion in state, local, and private spending. Reports indicate that the $200 billion would be broken down as follows:
- $100 billion for on a competitive grant program for state and local governments, favoring revenue-generating projects
- $50 billion for rural infrastructure
- $20 billion for “transformative” projects, defined as “ambitious, exploratory, and ground-breaking project ideas”
- $20 billion to expand low-cost federal loans aimed at waterways, railroads, and private activity bonds
- $10 billion to improve federally owned infrastructure
In addition, the plan would seek to speed up federal permitting processes. More information is available at: https://www.whitehouse.gov/briefings-statements/building-stronger-america-president-donald-j-trumps-american-infrastructure-initiative/
State Legal and Legislative Activity:
On February 21, Franklin County Common Pleas Court Judge David Cain ruled that language in the state budget bill (HB 49 ) allowing for the centralized collection of municipal net profits taxes meets constitutional muster. The ruling came in a lawsuit that included as plaintiffs more than 160 cities and villages across the state. Plaintiffs had asked the court to issue an injunction to prevent the law from going into effect. However, Judge Cain rejected the arguments made by the municipalities that the language violates both home rule and the single subject rule of lawmaking. “Everything comes down to whether the General Assembly has the power or it doesn’t,” he wrote in the nine-page decision. “In this case, the General Assembly has the power.”
Judge Cain found that the Ohio Constitution makes it clear that all taxes must be levied pursuant to the law. He went on to say that using common sense, the court could only find that the collections deal with the levying of taxes, and that the General Assembly has the authority to enact the collection provisions.
The judge also rejected the municipalities’ contention that the state must demonstrate they have abused their power of taxation to overcome a home rule challenge. In addressing the single-subject challenge, he wrote the contested provisions “have a logical and natural connection to the subject matter of HB49, i.e. appropriations.”
Tax Commissioner Joe Testa said that businesses that want to take advantage of the state’s new streamlined system for 2018 taxes have a deadline of March 1 to register through the Ohio Business Gateway. The budget provision in question, which was adjusted during deliberations on the measure, allows businesses to opt-in to the centralized collection process through the Ohio Business Gateway. A 0.5% administrative fee will be charged to municipalities by the Department of Taxation.
Ohio Municipal League Executive Director Kent Scarrett said the ruling is likely to be appealed.
Bills Being Tracked: Changes from last month are noted below in bold.
SB 8 BUDGET UPDATE (Gardner, R., Terhar, L.) This bill, another so-called “Christmas Tree” bill was signed by the Governor December 22 and becomes effective in 90 days. It would accomplish a number of initiatives, including: establish the 1:1 School Facilities Option Program, revise the law regarding applied bachelor’s degree programs offered at two-year state institutions of higher education, modify the schedule for phasing down tangible personal property tax reimbursement payments to school districts, to modify the payment cap in the school funding formula, modify the law governing the establishment and operation of transportation financing districts, modify county funding sources for a tourism development district, modify the veterans organizations grant program, allow county sheriffs to contract with municipal courts and county courts for the transportation of persons between the county jail and a county court or municipal court, make deputy sheriffs ex officio bailiffs of county courts and municipal courts, revise eligibility for School Employees Retirement System pension and benefit recipients’ annual cost-of-living adjustments, repeal a provision regarding acceptance of prior college courses by state institutions of higher education, authorize a tax credit for insurance companies that provide capital to investment funds investing in businesses in rural areas, exempt corrective eyeglasses and contact lenses from sales and use tax beginning July 1, 2019, provide that wages and guaranteed payments paid by a professional employer organization to the owner of a pass-through entity that has contracted with the organization may be considered business income, make appropriations, to modify earmarks, and make changes to reappropriations for grants related to the Lakes in Economic Distress Revolving Loan Program.
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, and a fourth hearing occurred September 27.
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. A sixth hearing in the Public Utilities Committee occurred January 25, 2018 with testimony from Sam Belcher, chief nuclear officer for the FirstEnergy Nuclear Operating Company.
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 8.
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 where two hearings with proponent testimony have occurred.
SB 238 WIND FARM SETBACKS (Dolan, M.) Introduced December 5, 2017, this bill is identical to SB 188. The bill calls for increasing the setback requirement of turbines to 1.2 times the blade’s length – up from the current 1.1 times – while at the same time requiring the minimum distance from the nearest blade to be measured from the nearest residential structure rather than the nearest property line. The net impact of those two changes is a shortening of the required setback distance. The bill’s sponsor Senator Dolan said that in modeling the legislation after SB 188, all prior testimony received will still apply to the new bill, thereby speeding up the legislative process. The bill was assigned to the Senate Energy & Natural Resources Committee, where a first hearing occurred January 10 and an amendment was adopted to add more local control. The amendment clarifies that it would be county engineers’ responsibility to make sure wind developers restore damaged roads or infrastructure to their condition prior to development. It also states police and fire personnel must be trained for emergencies stemming from wind farms.
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