Ohio Municipal League Legislative Bulletin
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November 24th 2014
SENATE COMMITTEE HOLDS HEARINGS ON MUNI TAX REFORM BILL
Last week, the Senate Ways & Means Committee held hearings Tuesday and Wednesday on Am. Sub. HB5, the municipal income tax reform bill. Tuesday’s hearing was held for opponent testimony on the bill while Wednesday’s hearing was for All Parties, which included more opponent witnesses in addition to a few proponent business representatives. Copies of the testimony offered last week and the previous week can be found on the committee’s website http://www.ohiosenate.gov/committee/ways-and-means.
The league would like to thank the municipal officials from across the state who took time out of their busy schedules to come to Columbus and share with legislators their city or village’s story and how the reforms included in the bill before legislators would impact the ability to generate revenue and support basic services. Specifically, we want to thank Mayors John Cranley, Cincinnati; William Duncan, Oakwood; Kevin Hardman, Sharonville; Mike Barhorst, Sidney; and Angela Kuhn, Whitehouse; City Managers Tim Riordan, Dayton; Mark Schwieterman, Kettering; Gary Huff, Piqua; and Patrick Titterington, Troy; Tax Administrators Art Prieksa, Akron; Tina Timberman, Athens; Rob Wright, Bowling Green; Mindy Frank and Kevin Robison, Columbus; and Clarence Coleman, Toledo; Finance Directors Dana Pinkert, Ashtabula and Tom Vanderhorst, Hamilton; Assistant Manager/Director of Economic Development Director Tom Franzen, Springfield and Upper Arlington Chief of Fire Services Jeff Young. Written testimony was also provided by Mayor Jim Nettis, Village of Orwell; Treasurer John Homlitas, Warren and Don Smith, Executive Director, Regional Income Tax Agency (RITA).
The Senate committee members were presented with the real world conditions of each municipality offering testimony. Senators heard the financial challenges currently being experienced, how certain treatments in the tax reform bill would negatively impact their community’s already strained financial stability and what additional revenue hits would mean to their city or village’s ability to be an attractive destination for economic activity while providing safety and infrastructure residents expect.
Chairman Peterson announced that the bill will not receive any action this week, since the legislature is basically idle for the Thanksgiving holiday. We expect that when the legislature returns to full action next week, the Senate Ways and Means Committee will hold a fifth hearing where amendments previously submitted will be debated, a substitute bill will be offered and the measure will be voted on by the committee. Once the bill is passed by the committee, the Ohio Senate will act quickly to move the bill to the floor where the new amended substitute version will be considered by the full membership of the upper chamber. When the Senate has made their final changes to the bill, it will be sent back to the Ohio House for their review of the Senate changes. If the House agrees with the changes that come back to them, the bill will then be sent to the Governor for his signature. If members of the Ohio House do not concur on the Senate changes, the bill will be sent to a conference committee to address the differences between the two chambers and work to resolve the conflicts so a bill can be sent to the Governor. If the differences between the Senate and House are not resolved before the General Assembly adjourns then the bill will “die” and would have to be reintroduced next year to start the legislative process over anew.
We will alert our members when the final committee notice is issued.
STATEWIDE POLITICAL RESEARCH ORGANIZATION ISSUES IMPACT REPORT ON HB5, OTHER STATE CUTS
Innovation Ohio, a statewide research and policy “think tank” issued an in depth report late last week, analyzing impact analysis reports prepared by cities and villages across Ohio in response to municipal tax reform proposals included in Am. Sub. HB5. The organization also identified the additional cuts to Ohio municipal revenues through the LGF, Estate Tax and other areas where policy choices made by the state continue to threaten the ability of municipalities to provide services that benefit every sector of the state.
HB5 Continues Assault on Local Services, Pushes Total Cut to Communities to $495 Million a Year
IO Report Shows Cumulative Impact of HB5 and Previous 4 Years of Cuts to Local Communities
Columbus - Innovation Ohio released a report today that shows the cumulative financial impact of House Bill 5, along with previous cuts to local communities passed in the last two state operating budgets. The report estimates that passage of House Bill 5 alone would cost communities $82 million a year, and when combined with previous cuts, the total impact on local services approaches nearly half a billion dollars annually.
"Our state is only as strong as our schools and local communities," said Innovation Ohio President Keary McCarthy. "Taken in context with the last four years of significant funding cuts to local communities, passage of House Bill 5 could have serious impacts on services that keep our streets safe and our communities strong."
Over the last four years, the state has cut an estimated $413 million each year for Ohio's cities and villages through reductions in Local Government Funding, reimbursement losses for TPP and KWH tax, and the elimination of the estate tax. Combined with an estimated $82 million in annual revenue loss from House Bill 5, the total impact on municipal services is estimated at $495 annually or nearly $1 billion of a two-year budgetary period.
"Republican and Democratic leaders in the Dayton region stand united in our belief that continued cuts to local communities have seriously harmed our ability to provide essential services such as police and fire protection, road paving and infrastructure repair," said Dayton Mayor Nan Whaley. "Loss of these services impact the quality of life for our constituents and the ability of our small businesses to thrive."
The report shows the estimated impact of House Bill 5 for 187 municipalities that have provided impact assessments, along with the specific funding cuts from the estate tax elimination, cuts to the Local Government Fund, and TPP and KWH reimbursement losses. The report also shows these cumulative estimated losses as a percentage share of the municipal budget. For the cities of Dayton and Cincinnati, these cumulative losses represent nearly 10 percent of its overall budget.
"House Bill 5 needs to be amended to stop cutting resources for local governments," said Cincinnati Mayor John Cranley. "The death by a thousand cuts coming from Columbus must stop."
For the cities that did not report estimated impacts from HB5, Innovation Ohio calculated the revenue impact per capita for the cities for which estimates are available to the population of the state's remaining 429 communities that levy an income tax. Combined, we estimate the potential statewide impact of HB 5 on cities and villages that levy an income tax at over $82 million each year.
"The state legislature's continued attempts to cut funding and hamstring communities is making it harder to keep our streets safe and our taxes low," said Marion Mayor Scott Schertzer. "Passing House Bill 5 without making reasonable changes that would limit the financial impact for communities would be yet another hit that everyday Ohioans will undoubtedly feel."
Read the report: " House Bill 5: Impact Analysis "
OHIO SENATE PASSES BILL RESTRICTING USE OF TRAFFIC CAMERA ENFORCEMENT DEVICES
On Wednesday, the Ohio Senate approved by a 24-9 vote SB 342, legislation sponsored by Sen. Bill Seitz (R-Cincinnati) which would require municipalities who wish to use automated electronic traffic enforcement devices (traffic cameras) to provide an extra layer of safety for the motoring public, only be permitted to use them if a uniformed police officer is present to witness the driving infraction and issue a citation, on the spot.
The bill, which came out of the Senate State Government Reform and Oversight Committee the same day, is expected to be taken up quickly by the Ohio House of Representatives, before the end of the Lame Duck session, who earlier this year passed HB69 (Maag/Mallory), legislation that outright bans the use of these safety enforcement tools.
The league will report on the progress of this bill and the many others that are being considered before the Ohio General Assembly concludes the work before them in this Lame Duck session and adjourns sometime in mid December. With the last minute legislating that always accompanies the end of a session or term, some bills near the end of their legislative journey become a “vehicle” (also known as a “Christmas Tree”) for other bills to be added to, through amendments or “riders”, cloaking the once stand alone bills into another bill heading to the Governor’s desk for final action. There is a bill that we are watching, HB 490, a left over Mid Biennial Review (MBR) bill introduced earlier this year dealing with changes to state agriculture policy. We will be watching closely if other legislation the league is working on is added to this or any other bill in the last legislative actions remaining for the 130 th General Assembly.