Last night, the Ohio General Assembly voted to pass Sub. HB 110, the $75 billion two-year state operating budget bill. The bill is being sent to Governor DeWine for his signature. He must sign the budget before July 1. You can find the LSC’s budget website HERE, which includes an updated comparison document HERE and an appropriation spreadsheet HERE.
The provisions in final version of the budget bill listed below will have a substantial impact on Ohio’s cities and villages.
Provisions OML Opposes:
· Retroactive Treatment of Temporary Withholding Policy: Sub. HB 110 allows for the retroactive treatment of Sec. 29 of HB 197, the temporary municipal income tax withholding provision, authorizing taxpayers to request for refunds for tax year 2021. Although this language also includes an extension of the temporary withholding policy until December 30, 2021, which the League supports, it also fundamentally alters the purpose of the emergency authority by allowing taxpayers to file refund requests for tax year 2021 for withholdings lawfully provided. This retroactive change to the intent and application of HB 197 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.
· “Bag Tax” Preemption: Sub. HB 110 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 budget language will make this Home Rule violation permanent.
The League sent a letter to Governor DeWine requesting that he veto these provisions. You can find a copy of that letter HERE.
Eliminated Provisions OML Supported:
· Virtual Meetings: The final version of the budget bill did not contain 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 this week on July 1 since the legislature chose not to extend the authority.
· Removal of Force Account Limit Increase: The Conference Committee removed a provision that would have 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 would have helped relieve municipalities of the requirement to engage in the competitive bidding process for those projects, which would have lowered overall cost and enabled projects to be completed more quickly.
Provisions OML Supports:
We want to thank the Ohio General Assembly for the inclusion of the following provisions that will invest in Ohio’s cities and villages:
· Removal of Municipal Broadband Systems Preemption: The Conference Committee removed the provision that would have effectively banned new municipal broadband projects and severely inhibit the service of existing systems while preventing municipalities from using federal funds for broadband expansion. This provision would have restricted municipalities from providing this essential service, especially in rural areas, and would reduce critical internet services that make educational opportunities and economic development possible. We thank the Conference Committee for removing this harmful preemption from the final version of Sub. HB 110.
· Broadband Expansion Funding: Funding was restored by the Conference Committee for the Ohio Residential Broadband Expansion Grant Program, which would have provided roughly $250 million in grants to expand broadband service, an increase from the $190 allocated in the House version of the bill. This funding is needed to ensure Ohio residents across the state have access to critical internet services.
· Brownfield Funding: The Conference Committee allocated $350 million in FY2022 for the creation of the Brownfield Redevelopment Program through the Ohio Department of Development. The program will reserve $1 million for each of Ohio’s 88 counties for brownfield remediation to be used within one year. The remaining funds will be available as grants from the Brownfield Remediation Fund created by the bill and will be awarded on a first-come, first-served basis and can be used to cover 75% of the project costs.
· Building Demolition and Site Revitalization: The bill also creates the Building Demolition and Site Revitalization Program through an amendment by the Conference Committee. The provision allocates $150 million in FY2022 for the demolition of commercial and residential building and revitalization of surrounding properties on sites that are not brownfields. $500,000 will be reserved for each of Ohio’s 88 counties to be used within one year. As with the Brownfield Redevelopment Program. the remaining funds will also be available on a first-come, first-served basis and can also be used to cover 75% of the project costs.
· Opportunity Zones: This provision changes the existing income tax credit 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. The Conference Committee amended the provision so that is no longer expands tax credit eligibility to all investors in Ohio opportunity zones but is only eligible to investors subject to the personal income tax. The Conference Committee also removed language allowing a nontaxpayer investor that cannot claim the credit to sell or transfer the credit to a taxpayer.
· Health Districts: The final version of the budget maintains 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 bill 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 will allocate $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.
· $13 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 was amended by the Conference Committee to allocate $2.5 million each fiscal year, up from $1.5 million, 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 will 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 Ohioans depend upon.
· H2Ohio Funding: The budget includes allocations for the H2Ohio fund which will help municipalities continue to provide safe, clean drinking water to residents and mitigate nutrient runoff within their local communities. The allocations are as follows:
o $20 million to the Ohio Environmental Protection Agency (EPA) over the biennium.
o $50 million to the Ohio Department of Natural Resources (ODNR) over the biennium.
o $83 million to the Ohio Department of Agriculture over the biennium.
We will be covering the highlights of issues in the legislation not related to local governments in Friday’s legislative bulletin, along with any items we may have missed pertaining to municipalities as we continue to unpack the budget bill.
We want to thank all our members who contact their legislative delegation and the DeWine Administration to lobby for the provisions that will invest in municipalities and to oppose language preempting local control and create greater financial burdens for Ohio’s cities and villages. The voices of local leaders has an impact on Ohio’s lawmakers and we appreciate out municipal leaders for engaging with the General Assembly and the Administration on behalf of Ohio’s local communities.