Happy New Year from everyone at the League! We hope you enjoyed the holiday season. As we transition into 2020, we've decided to recap the last year in a special bulletin for a review of 2019.
OML UPDATE AT-A-GLANCE
Before we look back on the last legislative year, here are the top three things you need to know from this past week:
- 2019 was the 4th deadliest year this decade on Ohio roadways this decade. This year saw 1,119 fatalities, while total annual fatalities have five of the past six years. Governor DeWine has announced he is working with legislative leaders to develop a statewide plan to address this problem
- On January 1, 2020, Ohio's minimum wage was increased by 15 cents to $8.70, which will benefit an estimated 84,000 Ohio workers. Approximately two-thirds of this workforce are adults.
- Thanks to Ohio's Historic Restoration Tax Credit program, 24 historic buildings across the state will be rehabbed. The credits are expected to leverage about $261 million in private investment in seven municipalities, preserving the historic and cultural value of these important structures while creating new opportunities for economic development. You can access a full list of the projects HERE.
LEGISLATIVE REVIEW OF 2019
With a total of 719 bill introduced so far, 2019 was a busy legislative year. This year also saw the passage of three large budget bills and the introduction of many other substantial pieces of legislation that impact Ohio's cities and villages. It was also the first full year of the DeWine administration, which has been vocal in its support of local control for Ohio's municipalities.
Here are some of the most substantial legislative and policy initiatives impacting municipalities that took place on Capital Square this year:
The DeWine Administration:
The DeWine Administration has been publicly supportive of local control, which is greatly appreciated by the League. Here are some of the actions taken by Governor DeWine that have benefitted Ohio's municipalities:
- Governor DeWine signed SB 52 into law on October 25th. The bill, sponsored by Sen. Gavarone (R - Bowling Green), creates the civilian cyber security reserve forces, makes the Secretary of State a member of the Homeland Security Advisory Council, requires the Secretary of State to appoint a chief information security officer, requires the boards of elections to audit election results, and makes an appropriation. The bill goes into effect January 24th, 2020.
- Governor DeWine has twice publicly expressed his opposition to HB 242, legislation that would preempt municipal Home Rule authorities related to the taxation of single-use plastic bags and other auxiliary containers. The League appreciates the Governor's continued defense of local control and his leadership on this matter.
- This fall, Governor DeWine held multiple meetings as the Governor's Residence for local government stakeholders to discuss the distribution of a $260 million settlement between three of the country's largest drug distributors along with a major drug making company and Cuyahoga and Summit counites. Those talks are still ongoing.
HB 62: The Transportation Budget
The legislature passed its biennial Transportation Budget, which garnered a lot of media attention and legislative debate over its increase of the gas tax. The final bill contained 10.5-cent increase for the gas tax, bringing the total to 38.5 cents a gallon, and a 19-cent increase for diesel, bringing the total to 17 cents per gallon. The distribution of the gas tax was adjusted to be split 55%-45% for the state and local governments respectively, instead of 60%-40%. Here are the other issues in the bill that impacted municipalities:
- $5 permissive licensing fee for municipalities and townships
- $70 million for funding public transit
- $200 and $100 fees for electric and hybrid vehicles respectively
- Created the Ohio's Roads to Our Future Study Committee
- Retained local control of e-scooters
- Changed administrative practices and allows the state to reduce LGF revenue distribution amounts for use of red-light cameras
- Removes $5 million relief funding from Oil and Gas Fund to communities impacted by fracking
HB 166: The State Operating Budget
In a welcome change-of-pace, the biennial State Operating Budget this year included many provisions supported by municipalities. They include:
- Increased the Local Government Fund (LFG) to 1.68%, an additional $5.2 million each year over the biennium.
- Fully funded the Multi-Agency Radio Communication (MARCS) local government fee offset at $4 million over the biennium.
- Restored some of the Supplemental LGF Distribution fund to Ohio's cities.
- Changes to municipal net profit collections:
- Required the Dept. of Taxation to develop a web portal to securely exchange information with municipalities
- Required the Tax Commissioner to notify a municipality when a taxpayer opts out of filing with the state
- Required the Tax Commissioner to conduct an audit referred by a municipality
- Required the Tax Commissioner to notify and share records with a municipality when examining a taxpayer.
- Allocated up to $170 million from the FY 2019 General Revenue Fund (GRF) surplus to the H2Ohio fund and expanded the use of the funding to community water projects.
- Reinstated the refundable motion picture tax credit and amended it to apply to both motion picture production expenditures and live theatre productions.
- Authorized all municipalities to charge unpaid garbage fees as a lien against real property if the fees are equal to or greater than $350.
- Incentivized investment in struggling communities via income tax credits for businesses that invest in Opportunity Zones.
- Allowed local governments to extend TIFS to an additional 30 years for large high-impact developments.
- Increased to $32 the fee for the first two pages of a recorded document and split the revenue between the Housing Trust Fund and the County recorders.
- Allowed local police departments to apply for School Safety Training Grants if the local school district did not apply.
- Increased Ohio Business Gateway (OBG) funding by 295.34%.
- Allocated $26 million over the biennium for local government audit support.
- Allocated $42 million over the biennium for BCI lab tests.
- Deemed a public safety answering point compliant with minimum staffing standards when compliant with all other operational standard rules.
The State Operating Budget also contained a substantial provision the League opposed, which Requires the Tax Commissioner, if the Municipal Income Tax Fund has insufficient cash to meet monthly distribution obligations, to submit a plan to the Director of Budget and Management requesting the necessary cash be transferred from one or a combination of multiple municipal funds. It also required the plan to include a proposed repayment schedule to reimburse those funds for any cash transferred and allows the Department of Taxation to seize additional municipal funds if the municipality does not reimburse those transferred funds.
Ongoing Challenge of Centralized Collection in Ohio Supreme Court
In 2017, after the State Operating Budget bill was passed authorizing the Ohio Department of Taxation to centrally collect and remit municipal net profit income taxes, approximately 130 municipalities filed a legal challenge that was condensed into a single lawsuit in Franklin County. That challenge is still ongoing. Here is a timeline of the events throughout the lawsuit:
- Centralized collection was upheld by the Franklin County Court of Common Appeals on February 21, 2018.
- It was upheld once again by the Franklin County Court of Appeals on February 7, 2019.
- The cities filed a discretionary appeal to Ohio Supreme Court in May 2019.
- The Supreme Court accepted the appeals case on August 6, 2019.
- The League and several municipalities filed amicus briefs in late September 2019
- The Ohio Supreme Court is set to hear the appeals case in early 2020.
Legislative Resignations and Appointments:
2019 saw an unprecedented amount of resignations and appointments to the legislature. They are as follows:
: Sen. Lou Terhar (R - 8th Senate District, party of Hamilton County)
: Former Rep. Lou Blessing
: Former Rep. Lou Blessing (R - 29th House District, part of Hamilton County)
: Harrison City Councilwoman Cindy Abrams
: Former Rep. Steve Ardnt (R - 89th Ohio House District, Ottawa and Erie Counties)
: Lawyer Douglas Swearingen
: Sen. Brian Hill (R - 20th Senate District, Fairfield, Guernsey, Hocking, Morgan, Muskingum and parts of Athens and Pickaway Counties)
: Former Rep. Schaffer
: Former Rep. Schaffer (R - 77th House district, most of Fairfield county)
: Businessman Jeff LaRe - appointed
Former Sen. Joe Uecker (R - 14th Senate District, Clairemont, Brown, Adams and Scioto Counties)
: Former Rep. Terry Johnson
: Former House Speaker Ryan Smith (R - 93rd House District, Vinton, Jackson, Gallia and Lawrence Counties)
: Lawrence County Auditor Jason Stephens
: Former Rep. Scott Ryan (R - 71st House District, Licking County)
: Newark City Councilman Mark Frazier
Legislation Opposed by the League:
Here is a brief overview of some of the bills that would substantially negatively impact municipalities if passed that are currently being considered by the legislature:
- HB 242 - AUXILIARY CONTAINERS. Sponsored by Rep. Lang (R - West Chester Township) and Rep. Jones (R - Freeport), would authorize the use of an auxiliary container for any purpose, to prohibit the imposition of a tax or fee on those containers, and to apply existing anti-littering law to those containers. This was voted out of the full House before the holiday break.
- SB 222 - AUXILIARY CONTAINERS. Sponsored by Sen. Rulli (R - Salem), is the Senate companion legislation to HB 242. This is currently pending in Senate Local Government, Public Safety and Veterans Affairs Committee.
- HB 163 - WATER/SEWER SERVICE. Sponsored by Rep. Brinkman (R - Cincinnati), would create a process for withholding local government funds and state water and sewer assistance from municipal corporations that engage in certain water and sewer practices with respect to extraterritorial service. This is currently still pending in the House Public Utilities Committee
- SB 206 - NONRESIDENT MUNICIPAL TAX CREDIT. Sponsored by Sen. Schaffer (R - Lancaster), would require municipal income tax credit for nonresident taxpayers. This is currently pending in the Senate Ways and Means Committee.
- HB 288 - EMINENT DOMAIN. Sponsored by Rep. Manning (R - New Middletown), would amend the law regarding eminent domain for recreational trails. This is currently pending in the House Civil Justice Committee
Legislation Supported by the League:
Here are several of the bill that would invest in Ohio's cities and villages that are currently pending before the legislature:
- SB 39 - MIXED USE DEVELOPMENTS. Sponsored by Sen. Schuring (R - Canton) To authorize an insurance premiums tax credit for capital contributions to transformational mixed-use development projects. This is pending in House Economic and Workforce Development Committee.
- HB 13 - BROADBAND EXPANSION. Sponsored by Rep. Carfagna (R - Genoa Township) and Rep. O'Brien (D - Warren), would establish the residential broadband expansion program and make an appropriation. This is pending in House Finance Committee.
- HB 218 - PUBLIC-PRIVATE AGREEMENTS. Sponsored by Rep. Patton (R - Strongsville), would authorize certain public entities to enter into public-private initiatives with a private party through a public-private agreement regarding public facilities. This is pending in House State and Local Government Committee.
- HB 220 - LEDGER TECHNOLOGY. Sponsored by Rep. Carfagna (R - Genoa Township), would allow a governmental entity to utilize distributed ledger technology, including blockchain technology. This is currently awaiting a vote on the House floor.
- HB 312 - CROWDFUNDING. Sponsored by Rep. Powell (R - Arcanum), would permit intrastate equity crowdfunding under certain circumstances. This was voted out of the full House.
- HB 370 - FIRST AMENDMENT. Sponsored by Rep. Hillyer (R - Uhrichsville) and Rep. Baldridge (R - Winchester), would allow the Attorney General to defend political subdivisions in certain actions brought under the First Amendment to the United States Constitution or analogous provisions of the Ohio Constitution. This is pending in House Civil Justice Committee.
- SB 190 - INCOME TAX CREDIT/LAW ENFORCEMENT. Sponsored by Rep. Schaffer (R - Lancaster, would allow an income tax credit for law enforcement officials who purchase safety or protective items to be used in the course of official law enforcement activities. This is pending in Senate Ways and Means Committee.
- HB 10 - OFFICE OF DRUG POLICY. Sponsored by Rep. Brown (D - Canal Winchester) and Rep. Stoltzfus (R - Minerva), would establish the Governor's Office of Drug Policy and make an appropriation. This was re-referred to Senate Finance Committee.
- SB 8 - OPPORTUNITY ZONES. Sponsored by Sen. Schuring (R - Canton), would authorize tax credits for investments in an Ohio Opportunity Zone. This is pending in the House Economic & Workforce Development Committee.
- SB 10 - THEFT IN OFFICE. Sponsored by Sen. Wilson (R - Maineville), would expand the penalties for theft in office based on the amount stolen and to include as restitution audit costs of the entity that suffered the loss. This was re-referred to House Criminal Justice Committee.
- HB 252 - LAND REUTILIZATION. Sponsored by Rep. Greenspan (R - Westlake), would create the Land Reutilization Demolition Program and make an appropriation. This was re-referred to House Finance Committee.
The League is looking forward to continuing to work with the DeWine administration to support local control and to continue to rebuild the relationship between municipalities and the state legislature to ensure Ohio is investing in its economic engines: cities and villages.