Ohio Municipal League
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Columbus, Ohio 43215

614-221-4349 Office
614-221-4390 Fax

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Legislative Inquiries
John Mahoney
General Inquiries
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General Assembly Breaks.

Handed time to breath on school funding by the Supreme Court and with a tax break and capital budget in hand, the Ohio General Assembly recessed for a summer of parades, County Fair food, fundraising and everything else that makes up a campaign year. The next scheduled sessions of the Assembly are in September.

Though dominated as always by dollars for school facilities, from the primary to the university level, the capital bill (HB 640) did contain $140 million for community projects, many of which were requested by our member-municipalities.

In the final days of the session preceding summer break, the General Assembly fashioned a compromise between the House and the Senate on cuts to Ohio's Estate Tax that keeps the state in line for some receipts from that tax and costs local government a modest amount of revenue. That loss in revenue to individual local government, however, will vary depending on the mix of large and smaller estates from which each local government receives its Estate Tax revenues.

Under provisions of the compromise, the exemption from Estate Taxes would bump up from the current $25,000 to $200,000 for those persons dying between January 1, 2001 through December 31, 2001. For those dying on or after January 1, 2002, the exemption would increase to $383,333. To make up for much of the aggregate loss to local governments resulting in this increase in the exemptions, the state will lower its share of the Estate Tax (currently 36%) and increase the local share (currently 64%). For estates subject to the 2001 exemption increase, local governments will receive 70% of the estate tax and the state will receive 30%. For estates subject to the 2002 and thereafter exemption increase, local governments will receive 80% of the Estate tax and the state will receive 20%.

Because Estate Taxes are not due until nine months after one's passing, the fiscal effect of these changes will not be felt by state and local governments for months following the effective dates of the new exemptions and the new state-local revenue sharing ratios.

The bill creating these changes (SB 108) also created a joint committee of the legislature to study ways of eliminating Ohio's Estate Tax by 2006.

The Legislative Budget Office estimates that these changes will cost local governments (townships and municipalities) $27 million between July, 2001 and July, 2003, the first two state fiscal years in which the changes will have an impact. Thus the local share from the Estate Tax, which would have been $661 million during those fiscal years under current law, is projected to be $634 million under the changed formula, according to LBO. While these losses in the aggregate are modest, the loss to a jurisdiction receiving all or most of its revenue from the Estate Tax from smaller estates, which will now be exempt from taxation, could be substantial. The number of communities like that and the impact on them stemming from these changes neither LBO nor the League can estimate at this point.

State revenues from the Estate Tax are expected to drop from a projected $272 million to $156 million during the first two fiscal years impacted by the changes made by SB 108, according to LBO.

Though both HB 249, which would bar local governments from having residency requirements for employees, and HB 397, which would allow for the establishment of municipal development commissions, were scheduled to be heard the last week of session neither bill got the chance. Because of the length of the Wednesday session in the House, meetings of the House Local Government and Townships Committee (HB 249) and the House Ways and Means Committee (HB 397) were cancelled. For now, both bills will remain in their respective committee.

As reported before, no hearings or actions on any annexation bills occurred during the last week of session. The next thing on the annexation agenda is a meeting on June 30 among all interested parties for an all-day negotiating session. We will keep you informed.

General Assembly Sends Two Railroad Bills to Governor.

The Ohio General Assembly took action on several pieces of legislation that deals with the operation and regulation of railroad crossings last week. The first bill, SB 207 sponsored by Senator Armbruster, would increase from a minor misdemeanor to a misdemeanor of the first degree the offense of obstruction of a street, road, or highway by a railroad; establish a fine of $1,000 that must be imposed for such an offense; create the offense of obstructing a public street, road, or highway by abandoning a locomotive and establish a fine of $5,000 that must be imposed for such an offense. The bill requires that fines for any such violation be paid to the county or municipal corporation in which the violation occurred and requires the fines to be used for railroad highway grade crossing improvements.

The second railroad bill deals with the use of a trains warning system. The bill, sponsored by Rep. Robinson, allows the use of an alternate audible warning system signaling the approach of a locomotive engine, subject to the approval of the Public Utilities Commission. Both pieces of legislation have been sent to the Governor for his signature.

Senate Acts on Mega Farms Bill; Sends It to the House.

The Senate also took action last week on SB 141, sponsored by Senator Doug White, which would transfer the regulatory authority over confined animal feeding operations (CAFO’s) from the Ohio Environmental Protection Agency to the Ohio Department of Agriculture.