Ohio Municipal League Legislative Bulletin

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June 26 , 2015

STATE OPERATING BUDGET NEARS FINAL PASSAGE/MUNICIPALITIES ASK GOVERNOR FOR VETO CONSIDERATIONS

 

The Ohio legislature is putting the final touches on the proposed $71.3 billion, two-year state operating budget plan this week as the House votes today on the report produced by members of the HB64 Conference Committee including the last language changes. Yesterday, the Ohio Senate did their part by approving the conference committee report which including large portions of the version adopted by Senator’s the week before. The Legislative Service Commission has produced a “Comparison Document” for HB64, the state operating budget bill that can be accessed at: http://www.lsc.ohio.gov/fiscal/comparedoc131/cc/comparedoc-hb64-ccr.pdf . The document compares all of the budget proposals offered by the Ohio House, Senate and what was decided upon as the final policy through the conference committee negotiations. The issues are listed through the state agency or department sections that have jurisdiction over that particular area of state government. Most of the areas that effect municipalities can be found in the “Local Government Provisions” section that begins on page #1105, municipal tax changes are included in the Department of Taxation section beginning on page #972, while the municipal LGF revenue changes can be found in the “State Revenue Distributions” area, on pages #958-959 specifically.

Most troubling to Ohio municipalities in what is being approved as the two year state spending plan is the retention of language adopted by the Ohio Senate that “redirects” revenue dedicated specifically for Ohio municipalities through the LGF municipal distribution, in the amount of $39 million over the two- year biennium. As we have previously reported through our last several editions of the legislative bulletin, reporting on the evolving budgetary additions and subtractions, budget language was added that will “redirect” over the two-year budget period $20 million of the municipal LGF distribution to the general funds of Ohio’s 1308 townships; $4 million to villages smaller than 1,000 in population and $15 million over the biennium to the Law Enforcement Assistance Program to increase police officer training for all police officials across the state including State Highway Patrol Troopers, Township Constables, County Sheriff Deputies, and state Park Rangers. The enhanced training mandates were proposed through recommendations offered by the Governor’s Police Relations Advisory Commission, many of which the administration is implementing. As a reminder of agreements reached in the not so distant past between the state of Ohio and its local government partners, this one goes back 43 years ago as to why the state provides some municipalities with this supplemental distribution. The city of Toledo was the first city to institute a municipal income tax in 1946, and thus was the first form of taxation on income for Ohio workers with other cities following suit shortly thereafter. The distribution formula for state support to local communities through the LGF, in what we are sure was made in good faith between Ohio’s state legislative leaders and their municipal counterparts at the time, included the recognition in 1972 that because the state legislature had just enacted Ohio’s own income tax, this new statewide income tax would be in direct competition with the ability of Ohio municipalities to raise revenue on the local level through their current local tax, because of the growing tax burden on Ohioans now coming from the state. In recognition of this new threat to funding municipal services and the importance of sustaining the mission of cities and villages, state leaders dedicated a mere 10% of the total yearly LGF distribution to be dedicated to Ohio municipalities who administer their own income tax. In 2014, that amount of the municipal LGF revenue distribution was roughly $28 million. What municipalities who receive this stipend will be left after the state budget siphons away this supplement to 536 Ohio cities and villages will be minimal, at best. The Department of Taxation will produce an analysis of the projected revenue losses cities and villages will incur soon and we will provide that information when it is available.

Ohio cities and villages are challenged more than ever by previous agreements with the state that have been broken or not lived up to in the area of taxation policy, revenue replacement schemes and numerous other instances where the state government continues to grow its scope of influence, eclipsing the authority and effectiveness of their local governments who deliver the services businesses and residents depend upon and expect every day.

The language included by the Ohio House that punitively withholds LGF revenue from municipalities that continue to operate Red Light cameras under the new state guidelines remains part of the operating budget plan despite current court challenges making their way through the judicial process, questioning the constitutionality of the state imposed restrictions.

There were changes made by the conference committee that we had asked for and are grateful that the final budget reflects things that we support such as:

 

Other general budget items included in the final package worth highlighting include:

 

After the House completes their approval of the state budget (HB64) conference committee report, the final budget plan will be sent to Governor Kasich over the weekend for his review. The Governor does posses the power of the “Veto” and can strike any language that he does not believe is the best policy for Ohio going forward. On Tuesday, on behalf of the OML Board of Trustees and our members, the league sent to Governor Kasich a letter HERE requesting his veto consideration for issues included in the budget that cities and villages are in opposition and wish not to be to included in the state operating budget and enacted into law. Throughout the summer, the league will include in our legislative bulletins greater detail on changes made in the budget that will have an impact on the administration of Ohio municipalities.

There have been other things happen at the Statehouse this week as the legislature pushes committee hearings and schedules in an attempt to “clear the decks” legislatively before the legislature breaks for their summer recess, which begins next week after the budget is signed. In upcoming bulletins we will highlight other budget issues included in HB64 and make our members aware of legislation moving through the process that they should be aware of.

 

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