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 LEGISLATIVE BULLETIN

Gas Tax Bill Heard; House Vote Expected Next Week

The House Finance and Appropriations Committee began hearings this week on the biennial budget for the Ohio Department of Transportation. Included in that bill is an increase in the gas tax and certain fees. When fully implemented, that proposal would result in an increase in gas tax revenue for local governments of $289 million per year. It would increase gas tax revenue for municipalities by 88% within three years. The increase would also provide ODOT with the dollars needed to fund and complete many high priority projects in and around many Ohio municipalities. Numbers for individual communities are posted on the League’s website at www.omunileague.org. League testimony in favor of the proposal is also posted at that site.

The committee is expected to conclude its consideration of the bill early next week, with a full House vote possible as early as March 12. Speaker of the House Larry Householder expressed confidence this week that the House would have the votes to pass the proposal.

If you haven’t talked to your members(s) of the House yet, please, call them to ask for their support of this gas tax proposal and tell them what this would mean to your municipality. We still have a number of House members who have not yet decided whether they will vote for or against this measure. Your phone call can be critical to the success of this critically needed boost in revenues for Ohio’s transportation program.

Additionally, if you could let us know any information about the position of any individual House member that would be helpful.

Correction.

Last week we told you in the Bulletin that because of the way HB 40 passed out of the General Assembly, the entire $30 million cut in local government funds will occur in June, affecting your July checks. Combined with an estimated cut in local government funds of $53 million, due to "reconciliation," local government funds will be cut at least $83 million in July.

We estimated that you could calculate your loss in July by deducting 71% from last July’s checks. However, because last July also had a significant downward reconciliation that number is high. This July’s checks should actually reflect a 33% reduction from last July’s checks, not 71%.

Your checks in March through June should be stable.

We apologize for this dumb mistake. We should also note that the $53 million reconciliation cut could change as we get closer to June. Indeed, that estimate has grown from $30 million to $53 million over the last few weeks. We will keep track of that and tell you if that number changes.

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House Ways and Means Committee Hears Municipal Tax Proposals

The House Ways and Means committee met Thursday to hear testimony regarding proposals included in HB 95,

Governor Taft’s proposed biennial budget, dealing with Ohio’s municipal taxation system. The legislative language was mostly derived from the final report of the Committee to Study State and Local Taxes (CSSLT).

Providing testimony to the committee was Ohio Tax Commissioner Tom Zaino, a coalition of representatives from the Ohio Chamber of Commerce including representatives of the Ohio Society of CPA’s. A municipal tax attorney and an employee of the Bob Evans restaurant franchise also testified.

Those providing testimony on behalf of municipal tax offices were representatives of the Regional Income Tax Agency (RITA), the mayor of Wyoming and tax administrators of Dublin, Findlay, and Sharonville. Because of time constraints, other tax administrators who were present were asked by the Chair to condense their testimony or to forgo their presentation if it was duplicative of previous testimony.

Commissioner Zaino began the hearing by presenting a slide show to committee members. The presentation included an overview of Ohio’s municipal tax structure, a brief history lesson on the function and duties of municipal taxation, and recommendations for greater municipal taxation uniformity and simplicity. The focus of the commissioner’s presentation was on the attempt to create uniform definitions on net profits, operating loss and withholding, along with instituting uniform filing dates, changing the taxpayer appeal process, creating an electronic central point for filing and transferring municipal business taxes. As presented to the committee, one of the goals of CSSLT, which Commissioner Zaino chaired, was to recommended to the legislature statutory changes aimed at simplifying and making uniform municipal taxation policies as they relate to Ohio businesses.

Although many Ohio municipal tax administrators have serious concerns about the negative revenue implications some of the recommendations may produce, the primary interest of the House Ways and Means committee members centered on the central collection idea. Commissioner Zaino proposes using the electronic-based Ohio Business Gateway system that began last year. The system serves as a tool for Ohio businesses to make electronic payments to the Department of Taxation and other state agencies. Mr. Zaino recommends that the system be used by Ohio businesses to pay their municipal tax obligations of the communities that serve them. The program is envisioned to not include the state in the central collection process, but provide the option of businesses to pay their taxes through the Business Gateway system which would in turn electronically transfer those payments and supporting documents to the appropriate municipality. The Commissioner has targeted 2007 as the date when the program can be fully phased in.

The concerns of the local officials who braved the winter weather and over four-hour packed hearing to provide the committee with testimony were varied and far-reaching. As was stated by Commissioner Zaino, the devil is in the details. The proposed Gateway payment system will not fund itself and many expressed concerns that the funding for the state system may fall on the backs of already financially strapped municipalities. Further, concern was expressed at the timeliness in turn around after a tax obligation has been electronically met and the ability to track extensions, administer audit and compliance matters and other administrative procedures. Specifics of the positive or negative revenue impacts caused by the proposed definition changes are troubling to many tax administrators whom have been studying the issue for nearly a year. Because all Ohio communities are unique and do not have the same variables of administration, creating "uniform" definitions may be good to one community but detrimental to others.

Members of the committee also heard in municipal testimony that many businesses have expressed to them that their business is not hampered by filing with their local tax offices. These and other important matters of true revenue neutrality and tax simplicity and what that means to all 541 taxing communities will continue to be addressed and hopefully worked-out as the House Ways and Means committee will be holding hearings next week on the Governor’s recommendations. Please contact your representative and senator now and share with them any concerns you may have.

SENATE HIGHWAYS & TRANSPORTATION, 9:30 a.m. session, Finance Hearing Rm., Chr. Armbruster, Phone: 644-7613.

Transportation budget and presentation by Department of Transportation Director Gordon Proctor.

SENATE WAYS & MEANS & ECONOMIC DEVELOPMENT, 10 a.m., South Hearing Rm., Chr. Amstutz, Phone: 466-7505.

Testimony on municipal income tax and tangible personal property tax reform options included in the Committee to Study State and Local Taxes final report.

HOUSE FINANCE & APPROPRIATIONS, 1:30 p.m., Rm. 313, Chr. Calvert, Phone: 466-8140.

HB 87 TRANSPORTATION BUDGET (Buehrer) Makes appropriations for programs related to transportation and public safety. (5^th Hearing - Possible vote)

HOUSE STATE GOVERNMENT, 3 p.m., Rm. 122, Chr. Carmichael, Phone: 466-1474.

HB 81 COMMUNITY IMPROVEMENT CORPORATIONS (Core) Revises community improvement law. (2^nd Hearing - Proponent, opponent & interested party)

HOUSE COUNTY & TOWNSHIP GOVERNMENT, 10 a.m., Rm. 121, Chr. Wolpert, Phone: 466-9690.

HB 24 VILLAGE DISSOLUTIONS (Wolpert) Permits the board of county commissioners to dissolve a village under certain conditions. (3^rd Hearing - Proponent, opponent & interested party)

HOUSE WAYS & MEANS, 10 a.m., Rm. 121, Chr. Kilbane, Phone: 466-0961.

HB 58 TAX REFORM DIRECTIVE (Kilbane) Directs the General Assembly in its deliberations regarding state tax laws. (2^nd Hearing - Proponent, opponent & interested party - Limited to the municipal income tax)

HOUSE BANKING, PENSIONS & SECURITIES, 10:30 a.m., Rm. 018, Chr. Blasdel, Phone: 466-8022.

HB 69 PERS MEMBERSHIP (Faber) Includes certain county and independent agricultural society employees in the Public Employees Retirement System. (1^st Hearing - Sponsor)

HB 98 PENSION FUND OPTIONS (Willamowski) Makes changes to benefit plans in the PERS, STRS, and SERS. (1^st Hearing - Sponsor)