Tracked Senate Bills – September 2018

Chris Schmenk.
Bricker & Eckler LLP

State Political and Legislative Activity:

Ohio Legislature: Recent House and Senate Sessions have been cancelled, and legislators are in full campaign-mode.  However, work has continued in legislative committees.  A Senate Session is scheduled for September 25.

Tax Expenditure Review Committee: The Tax Expenditure Review Committee was created in 2016 (HB9, 131st General Assembly) and requires the legislature to evaluate over an eight-year period Ohio’s tax credits and exemptions, including economic development programs that use these tools. The group has met four times, reviewing 15 tax credit/exemption programs, and was legislatively required to issue its first report July 1.  That report is now tardy, so watch for the report to come out later this fall.

Lake Erie Executive Order:  Controversy continues about Governor Kasich’s Lake Erie Executive Order signed July 11, which attempted to mandate limits on nonpoint source phosphorus, such as that from agricultural operations, which may fuel harmful algal blooms in Lake Erie.  Feedback was recently sought by the Ohio Department of Agriculture on proposed rules promulgated under the Order, and concerns were expressed by key legislators as well as the Ohio Soil and Water Conservation Commission.  The Legislature plans to form a Study Committee to gather additional constituent input, although members of the Committee have not yet been appointed.  The Governor’s Administration has signaled that it still intends to advance the rules through the rulemaking process via the Common Sense Initiative and the Joint Committee on Agency Rule Review. The rules would then return to the commission for final approval.

Bills Being Tracked:  Changes from last month are noted below in bold.

Senate Bills:

SB 43 BUILDING CODES (Bacon, K.)  This bill 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.  A 4^th hearing occurred June 27, where an amendment was approved that would exempt state property that is within a district.  The bill passed out of Committee and then was passed by the Senate July 10.

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. 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.  Changes were adopted last October in a substitute version that included lower cost caps for the ZEN program. The new bill also fixed residential charges to $2.50 per month and shortened the program’s lifespan from 16 years to 12 years. The most recent hearing in the Public Utilities Committee occurred January 25, 2018.

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 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 to the Senate Finance Committee where on April 17, 2018, substitute legislation was proposed to modify the bill per recommendations from the Ohio Department of Taxation.  Under the revised measure the exemption would not apply if the goods:

— need to be registered or licensed according to state law;

–are purchased by foreign corporations;

–were delivered to the relative of the ultimate purchaser, or

–are stored within the state for more than 60 days.

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.

SB 309 TAX CREDITS  (Peterson, B., Kunze, S.)  Introduced June 7, 2018, this bill would lengthen the maximum term of the job creation tax credit for businesses making substantial fixed asset and employment investments (and meeting the definition of “megaprojects” as set forth in the bill) and for their suppliers, to authorize commercial activity tax exclusions for receipts of those suppliers from sales to such businesses, and to authorize local governments to grant longer term property tax exemptions for such businesses or suppliers. The bill was assigned to the Senate Ways & Means Committee, where a hearing occurred June 26, 2018.