Ohio Municipal League Legislative Bulletin
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November 20 , 2015
Ohio House Begins Hearing Process on Numerous Municipal Related Bills
The Ohio legislature was in full swing this week, busily working bills through the committee hearing process as the legislative calendar will begin to constrict with the coming of the Holidays, beginning next week. In observance of Thanksgiving next week, there will be little activity at the Statehouse as members of the legislature return to their home districts or do as many of us do and travel over the hills and through the woods to reach your celebratory destinations, which is not the Statehouse for the fortunate ones.
On Tuesday, the House Local Government Committee convened a meeting which included six bills directly pertaining to municipal interests, with topics addressed ranging from issues effecting TYPE-II annexations, municipal home rule to waterway management. All of the bills heard Tuesday by committee members were the first hearing for the respective bills where the sponsor’s of the proposals presented to committee members the rationale for their bills. Below is a brief description of the municipal bills heard Tuesday by the House Local Government Committee:
Rep. McClain shared with committee members that during conference committee deliberations that took place several years ago related to the then proposed state biennial budget, there was an effort by some legislators to remove most entities’ or individuals’ ability to file a complaint on a property they don’t own. “I was able to defeat the amendment because I believed there should be this option, only with proper notification and transparency. That is why I believe HB231 is a fair compromise to protect both the owners’ and the public’s attempts at fair taxation.”
The impetus for the proposal seems to derive from one Ohio village which the sponsors claim has established a "civil-violations system," in which fines are paid directly to the village. Although this situation may need to be examined, the league is very concerned about the root effect of the proposal which will violate the Home Rule provision of the Ohio Constitution. Even the analysis prepared by LSC for committee members states that under Home Rule authority, municipalities have authority to exercise all powers of local self-government and to adopt and enforce within their limits such local police, sanitary, and other similar regulations not in conflict with general laws. The regulation of traffic is an exercise of municipal police power, as defined by Ohio Supreme Court rulings, and is valid so long as it does not conflict with a general law.
Rep. Stinziano explained to committee members that, “in effect, a single amendment in H.B. 64 placed the quality of the public’s drinking water in the hands of nearby residents by giving them access to alter ‘buffer zones’ owned by municipalities. These cities maintained certain vegetation requirements in order to naturally filter out chemicals that could enter the drinking supply.”
2020 Tax Policy Study Commission Holds Second Meeting; Municipal Taxation Enters Conversation
A legislative tax study committee met this week to begin the process of examining issues associated with the feasibility of Ohio revamping the current income tax structure from a graduated tier system to a flat tax, further review of the existing severance tax and the future of the Ohio Historical Preservation Tax Credit. The 2020 Tax Policy Study Commission, chaired by Sen. Bob Peterson (R-Washington Courthouse) and Rep. Jeff McClain (R-Upper Sandusky) received testimony Thursday from three witnesses, Richard Vedder, distinguished professor of economics emeritus at Ohio University, and two representatives of the National Federation of Independent Businesses (NFIB), Albert Macre, CPA of Steubenville , and Steve Bowser of the engineering firm Bowser-Morner, Inc. The witnesses generally talked about the overall universe of state tax issues such as how the CAT tax is working, how a flat tax could be accomplished, how other states have modified their tax administrative practices and the outcomes that have resulted or not resulted, including general opinions of how the state should proceed in making tax policy adjustments.
Invariably, although not part of the charge assigned to the tax study committee, the issue of municipal taxation was addressed by the business witnesses, as part of their prepared testimony. The CPA shared with committee members that he looks forward to the changes coming through the implementation of municipal income tax “reforms” included in HB5 while the business owner feels the reform measure did not go far enough and that conforming with employee tax liability withholding requirements remains very onerous for his organization and feels that this requirement to contribute to the financial support for services his workers enjoy while working in various Ohio municipalities puts his company at an “uncompetitive” disadvantage.
Following the testimony by the three witnesses, a discussion ensued regarding levels of local taxation and how they affect the state’s overall tax exposure ranking. The comments were offered by commission panelist Tim Keen, Director of Ohio Budget and Management, part of the Governor’s administration, who observed that, “municipal income taxes continue to only climb higher, the various piggy-back taxes that are being applied by counties on sales taxes and the taxing authority of local school districts, all accumulates to add tremendous pressure on taxpayers and inflates the state’s overall tax rating as compared with other states and through the Tax Foundations scoring system.” Mr. Keen implored the panel to widen the scope of issues to be considered by the review panel to include what to do about the growing local tax issues.
League staff present at the hearing found that comment interesting and a little perplexing that there is now a concern for the “tax shift” that has and continues to take place through-out the state followed by the recommendation that something must be “done about it” by the Ohio legislature. It may be lost on the OBM Director, who was one of the lead spokesman for the administration cheerleading the policy decisions of 2010 that included slashing the Local Government Fund (LGF) by more than half and the elimination the Ohio’s Estate Tax, depriving cities and villages of nearly $250 million annually, compounding the financial pain of already depleted municipal budgets. It is the hope of the league that the legislature will address the current inequities of past revenue sharing policy changes and will accept that when the state withdraws from decades old revenue sharing agreements and makes other tax policy changes that have the effect of draining already scarce local revenues away from our service providing cities and villages, that these changes do not occur in a vacuum and that residents and businesses suffer.
Legislature to Recess Next Week in Observance Of Thanksgiving
Due to the upcoming Holiday next week, there is only one committee that has announced a hearing schedule for next week, which is listed below. If there are any changes to the committee schedule, we will be sure to post those to our website Monday. The league will not produce a legislative bulletin next week and will resume our reporting of legislative activity the following week.
Have a safe and enjoyable Thanksgiving.~