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November 22, 2019  

Here are the top three things you need to know from this past week:
  • The National Oceanic and Atmospheric Administration issued a seasonal assessment confirming earlier projections of a "significant" algal bloom season. The DeWine administration is accepting pre-proposals from universities and colleges for research projects aimed at producing solutions to algal blooms. Those projects could qualify for up to $2 million in project funding.
  • The U.S. Department of Housing and Urban Development awarded over $3.2 million to Ohio public housing authorities through the Family Self-Sufficiency program, which is aimed at helping residents increase their income and reduce their dependency on housing assistance programs.
  • The Ohio Department of Natural Resources has approved more than $3.3 million for 86 projects in 66 counties through its NatureWorks grant program to support outdoor recreation projects such as trails, playgrounds and picnic shelters.
The legislature will have a slow week next week due to the Thanksgiving holiday, so we will not be sending a bulletin until after the holiday break. The League wishes everyone a safe and happy Thanksgiving!
This week, the Senate Ways and Means Committee met to hold a second hearing on SB 206, legislation introduced by Sen. Tim Schaffer (R - Lancaster), which would mandate a 10% income tax credit to taxpayers who work, but do not live, in a municipality that collects $100 million in annual revenue. You can find the bill language HERE.
SB 206 would require municipal corporations with more than $100 million in annual income tax collections in any one year since 2009 to provide a tax credit to nonresident taxpayers. This includes those who work in the municipality but live in townships, "bedroom communities" and out of state. The tax credit would either be the greater of 10% of the nonresident's tax liability or their tax liability in excess of 2% of the nonresident's taxable income. This means that depending upon the municipality, the tax credit can be from 10% to 20%.
This bill would have a severe negative impact on Ohio's municipalities and the state as a whole in the following ways:
  • SB 206 is a direct attack on fire, police and EMS services. The loss of revenue caused by this bill would likely nullify existing contracts and agreements for crucial fire and safety services with their neighboring communities. 70% of municipal revenues fund these first responders who are all on the front lines of the on-going opioid epidemic throughout our state. If a municipality loses millions in funding for exceeding $100 million in annual revenues, it may become financially impossible for that municipality to share first-responder services with the neighboring communities that house the nonresidents receiving the tax credit.
  • SB 206 is distinctly un-business friendly. Companies would be mandated to calculate whether their nonresident workers are owed the greater of 10% of the nonresident's tax liability or their tax liability in excess of 2% of the nonresident's taxable income. This is especially unfair to smaller businesses that lack the adequate resources to comply with these burdensome reporting requirements.
  • SB 206 disincentivizes economic development. This bill severely penalizes municipalities for successfully attracting the very businesses that have freely elected to locate within a municipality. Ohio's municipalities strive to be business-friendly, which is why 80% of all the businesses in Ohio are located within a city or village.
  • The cost to provide these essential services to the employer do not change merely because some of the workforce lives outside the municipality. Businesses choose to locate in municipalities because of the services provided to those employers such as fire, police, water, sewer, streets and roads. Nonresident workers benefitting from quality services delivered by the municipality such as clean water, fire and safety services, and safe roads would use those services five days a week without having to pay for them.
  • SB 206 would essentially change the structure of how municipalities are funded. While counties have the sales tax and townships and school districts have the property tax, municipalities have the income tax. It is the largest source of revenue for the vast majority of Ohio's cities and villages. SB 206 is yet another attack on the ability of municipalities to continue to create safe, business-friendly communities throughout our state.
  • SB 206 would raise taxes on Ohioans. The 10% tax credit to non-residents represents more than just a loss of much-needed revenue for a city or village; it also represents a likely increase in the tax burden on the residents of that city or village. While non-residents would see a 10% or 20% reduction in tax, the cost of delivering those quality services will not in turn decrease by 10% or 20%. The municipality will need to balance the difference on the backs of its residents.
  • SB 206 would punish success, progress and prosperity when Ohio's municipalities are "too good" at generating economic development. Cities and villages would be forced to be wary of the number of businesses and workers they attract because they stand to lose millions in revenues if they reach $100 million in annual revenues collected.
  • SB 206 would result in direct payouts to out-of-state workers. Those that work in Ohio but live in Indiana, Pennsylvania, Kentucky and Michigan would receive a 10% tax credit, essentially creating a process by which Ohio directly invests in the economies of "that state up north" and other surrounding states.
The League will not support this legislation as it is not business friendly and puts Ohio at a distinct disadvantage with our neighboring states. SB 206 would punish economic development, benefit out-of-state workers, increase taxes and jeopardize service-sharing contracts and agreements. While the bill currently sets the threshold for the tax credit at $100 million in annual revenues, there is no reason that threshold would not be reduced or done away with entirely.
We strongly encourage our members to call their senators and educate them on why they should oppose this misguided idea.
We will alert our members when SB 206 is slated for opponent testimony in committee.
This week, the League gave testimony on SB 212, which is sponsored by Sen. Schuring (R - Canton). The bill would authorize townships and municipal corporations to designate areas where new homes, as well as improvements to existing homes, are wholly or partially exempted from property taxation. You can find the bill language HERE.
During its second hearing before the Senate Ways and Means Committee, the League's Director of Communications Ashley Brewster testified in support of the bill. In her testimony, she explained that a municipality can designate a Neighborhood Development Area, or NDA, that would qualify new owners or developers of single-family homes for either full or partial property tax exemptions. It would also qualify owners who spend $10,000 or more renovating a single-family home for an incremental value exemption for five years.
The League's testimony supported the bill as a permissive tool to help municipalities generate economic development. "Cities and villages would be able to use this tool as a means of "placemaking", creating neighborhoods that attract the upcoming younger workforce and thereby attract businesses to their communities," said Ms. Brewster in her testimony. "By encouraging economic development and job creation, a municipality would benefit from increased revenue generation that would further enable the delivery of quality services Ohio businesses and its citizens deserve."
The League appreciates Sen. Schuring's legislation supporting Ohio's municipalities. You can read our testimony in full HERE.
Last week, the League's Executive Director Kent Scarrett spoke with John Damschroder on Toledo's 107.7 The Wolf to talk about preemptions and other issues affecting municipalities. You can listen to the interview in full HERE.
Here is a bill impacting municipalities that passed the House this week:
  • HB 312 - CROWDFUNDING. Sponsored by Rep. Powell (R - Laura), would permit intrastate equity crowdfunding under certain circumstances. The House passed this bill unanimously. The League is supportive of this legislation.
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Here are the bills impacting municipalities that received committee hearings this week:
  • SB 212 - PROPERTY TAXATION. Sponsored by Sen. Schuring (R - Canton), would authorize townships and municipal corporations to designate areas within which new homes and improvements to existing homes are wholly or partially exempted from property taxation. During it second hearing before the Senate Ways and Means Committee, the League's Director of Communication Ashley Brewster testified in support of the bill. You can read her testimony in full HERE.
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  • SB 33 - CRITICAL INFRASTRUCTURE. Sponsored by Sen. Hoagland (R - Adena), would modify certain criminal offenses with respect to critical infrastructure facilities and to impose fines and civil liability for damage to a critical infrastructure facility. During its sixth hearing before the House Public Utilities Committee, both proponents and proponents of the bill testified before the committee. The bill's chair, Rep. Callender (R - Concord) indicated the bill would be voted on shortly after the Thanksgiving holiday. The League is supportive of this legislation.
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  • HB 264 - INFRASTRUCTURE LOANS. Sponsored by Rep. Wilkin (R - Hillsboro) and Rep. O'Brien (D - Warren), would allow the Ohio Water Development Authority to provide for the refinancing of loans for certain public water and waste water infrastructure projects. During its fourth hearing before the House State and Local Government Committee, the bill was unanimously voted out of committee after proponent testimony from the Buckeye Institute. The League is supportive of this legislation.
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