Ohio Municipal League
175 South Third Street
Suite 510
Columbus, Ohio 43215

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

email:
Legislative Inquiries
John Mahoney
General Inquiries
info@omunileague.org

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OML E- BULLETIN
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PLEASE CIRCULATE THIS BULLETIN TO YOUR COUNCIL, DEPARTMENT HEADS & STAFF

LOCAL GOVERNMENT REVENUES A TARGET

KILOWATT HOUR TAX

The Ohio House of Representatives has commenced its plan to balance Ohio=s budget, at least partially on the back of municipalities. Current law allows municipalities to retain proceeds of the Aelectric Kilowatt-hour tax from consumers inside the municipality. The tax is collected by municipalities with electric utilities. The state currently receives the proceeds of the tax on municipal electric consumers located outside the municipality. The House majority party proposal would change the law so that the tax proceeds currently retained by the municipality would be paid to the state, B an estimated loss of $49 million to Ohio municipalities with electric utilities. It is our view that the proposal is unconstitutional on two basis: (1) It violates the utility powers granted municipalities by Sections 4, 5, and 6 of Article XVIII, Ohio Constitution, since it would interfere with the ownership and operation of a municipal utility (State, ex rel. McCann v Defiance (1958), 167 Ohio St. 313; Columbus v Power Siting Comm., (1979), 58 Ohio St. 2 d. 435; Columbus v Public Utilities Comm. (1979), 58 Ohio St. 2d 427; and (2) It would require the municipality to levy a tax for the benefit of the State of Ohio, which would be for a state public purpose, not a municipal public purpose.

LOCAL GOVERNMENT FUND TO TAKE ANOTHER HIT

Proposals generated by the Governor and by the House leadership call for the repeal of the dealers in intangible tax. Each county undivided local government fund receives five eights of these taxes paid by dealers in intangibles in the county - in 2000 this amounted to $13.9 million.

Both proposals would subject the dealers in intangibles to the corporate franchise tax which would help the state but only produce $1.8 million for the local government fund.

CALL YOUR OHIO HOUSE OF REPRESENTATIVES MEMBER ASAP AND OBJECT TO BOTH OF THESE PROPOSALS.