This afternoon, the full Senate will vote on the latest version of the budget bill, which was adopted and voted out of the Senate Finance Committee yesterday. You can find the full omnibus amendment HERE, the synopsis of the amendment HERE, the budget appropriation spreadsheet HERE and the LSC comparison document detailing the differences between the budget proposal presented by Governor DeWine, the version passed by the Ohio House and the current version offered today by the Ohio Senate. That “comp. doc.” is HERE.
While several of the Senate’s changes would benefit municipalities, the new budget language also includes not only issues that will create significant financial difficulties for Ohio municipalities across the state, but substantial preemptions on the constitutional Home Rule authority granted to municipalities. Please see the complete list of provisions impacting municipalities in the latest version of the budget bill:
Provisions We Oppose:
· Retroactive Treatment of Temporary Withholding Policy: The budget bill now contains the harmful language previously included in Sub. HB 157, causing retroactive treatment of Sec. 29 of HB 197, the temporary municipal income tax withholding provision. This means that although the language includes an extension of the temporary withholding policy until December 30, 2021, it also fundamentally alters the purpose of the emergency authority by allowing taxpayers to file refund requests back to March 9, 2020 for withholdings lawfully provided. This retroactive change to the intent and application of HB 197 passed March 9, 2020 will result in potentially devastating financial consequences to the ability of Ohio’s cities and villages to support first responder services and other critical functions of municipal government.
· Preemption of Municipal Broadband Systems: This provision would effectively ban new municipal broadband projects and severely inhibit the service of existing systems. The language limits municipal broadband networks to “unserved” areas of a municipality and prohibits them from serving outside of that area. The amendment also subjects any new broadband system to the same requirements as a private company and imposes limits on how municipalities can use federal funds for broadband expansion. This provision also imposes requirements that are not imposed on private companies, such as preparing a formal business plan and establishing measures to protect residents from any tax or fee increase to offset any losses if the network performs poorly or demand is insufficient. The municipalities would also have to refund any profits to taxpayers if the operation of the network generates a net profit.
· “Bag Tax” Preemption: The bill contains language to make permanent the preemption on Ohio’s political subdivisions including municipalities to imposing a tax, fee, assessment or other charge on auxiliary containers, also called the “bag tax”, and the sale or consumption of auxiliary containers. HB 242 of the 133rd General Assembly enacted a temporary preemption on communities instituting a bag tax, but that provision was set to expire on January 15, 2022. The Senate language will make this Home Rule violation permanent.
· Elimination of Broadband Expansion Funding: The Senate version of the budget does not include the Ohio Residential Broadband Expansion Grant Program, which would have provided roughly $190 million in grant funding to expand broadband service, which the League strongly supports. This funding is needed to ensure Ohio residents across the state have access to critical internet services.
· Virtual Meetings: The Senate version of the budget bill deleted language added by the Ohio House of Representatives that extended the temporary authorization for public bodies to meet via electronic technology until December 31, 2021. The current authority will expire on July 1 without an extension by the legislature.
We urge our members to contact their representative and senator and urge their opposition to these provisions and educate them on the harmful impact these changes in state policy will have on not only your community, but all of Ohio’s cities and villages.
Provisions We Support:
· Force Account Limit Increase: The Senate has increased the force account limits for highway projects undertaken by an unchartered municipal corporation from $30,000 per project to $90,000 per project. This increase will help relieve municipalities of the requirement to engage in the competitive bidding process for those projects, which lowers overall cost and enables projects to be completed more quickly. Municipalities will be able to employ their own workforce for these projects, enabling local leaders to keep costs down and remain good stewards of local taxpayer dollars.
· Opportunity Zones: This provision changes the existing income tax cred for investments in federally authorized opportunity zones in Ohio by increasing the limit on the amount of credits an individual can be awarded during a fiscal biennium from $1 million to $2 million. It also expands a tax credit eligibility to all investors in Ohio opportunity zones, not just investors subject to the personal income tax. (A nontaxpayer investor that cannot claim the credit may sell or transfer the credit to a taxpayer.)
· Health Districts: While the Senate has maintained the House provisions requiring a city health district with a population of less than 50,000 to study a merger with the general health district that includes the city and contract with the general health district for the administration of city health affairs if the study indicates that the merger is advisable, the budget bill now exempts a city health district from these requirements if it is either accredited or in the process of applying for accreditation and receives it by December 31, 2025.
· Transformational Mixed-Use Development Projects (TMUD): This provision modifies an existing insurance premium tax credit for capital contributions to the construction of a transformational mixed-use development (TMUD) by extending the sunset date for certifying new TMUD projects by two years, to June 30, 2025; and setting the maximum annual credit allotment for fiscal years 2024 and 2025 at $100 million.
· Treasury Offset Program (TOP): This provision allows municipalities to participate in the Treasury Offset Program (TOP), which is a federal program whereby states can have eligible debts withheld from a taxpayer’s federal income tax return. Municipalities can participate through the Ohio Attorney General’s office and effectively recover the municipal revenues they are owed, which in turn funds local services. Taxpayers will also benefit from this, as could be saved from paying more than what they originally owe the municipalities because of penalties and interest.
· Local Law Enforcement Funding: This budget currently allocates $15 million for a one-year police training pilot program to assist law enforcement agencies with training costs and creates a 12-member Law Enforcement Training Funding Safety Commission to study possible long-term methods for providing state aid to law enforcement agencies for training police officers to help ensure local law enforcement can access to critical and timely training that will best equip them to serve and protect their communities. The bill also includes these additional critical investments for local law enforcement:
· $10 million in grants to local law enforcement agencies across the state to implement or enhance body-worn camera programs, including the body cameras themselves and other associated expenses.
· $8 million to help reduce violent crimes through state and local law enforcement agencies through flexible grant funding
· $1 million to support state and local law enforcement agencies in recruiting and hiring new peace officers.
· $6.5 million to expand the Ohio Narcotics Intelligence Center (ONIC) to further support local law enforcement and their partners.
· Multi-Agency Radio Communications System (MARCS): This provision would allocate $1.5 million each fiscal year to fund the MARCS program’s local fee offset to ensure that many of Ohio’s local first responders can remain in the program so that Ohio’s safety forces able to continue to communicate with one another.
· Local Government Fund: The budget would continue funding for the Local Government Fund (LGF) at current statutory levels. This funding is a continuation of the state and local partnership as cities and villages navigate the pandemic’s revenue impacts while continuing to provide the critical local services that Ohioan’s depend upon.
· H2Ohio Funding: The budget would currently restore the H2Ohio fund at $20 million over the biennium, which will help municipalities continue to provide safe, clean drinking water to residents and mitigate nutrient runoff within their local communities.
After the Ohio Senate passes their version of Sub. HB 110, it will then be returned to the Ohio House of Representatives and, in keeping with tradition, the Ohio House will not concur on the Senate’s changes This will send the budget bill to a Conference Committee in order to negotiate the differences between the versions presented by the DeWine Administration, Ohio House and Ohio Senate.
The legislature has until June 30 to send the agreed-upon budget to the Governor’s desk so that it can be signed into law by July 1. This means there is very little time remaining between now and when the bill will become law to make any changes to the budget. It is critical that our members contact their legislators and the Governor’s office to ensure the removal of the provisions that are harmful to municipalities and to advocate for the provisions that would invest in Ohio’s cities and villages.