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No. 20 June 13, 2003 PLEASE CIRCULATE THIS BULLETIN TO YOUR COUNCIL, DEPARTMENT HEADS & STAFF Budget Goes to Conference Committee. The state’s biennial budget officially was put into a conference committee of the House and Senate this week. Named as conferees for the House were Representatives Calvert, Hoops and Jerse. Serving on behalf of the Senate is Senators Harris, Amstutz and Fingerhut. Estimates place the number of differences between the Houses at about 1000. However, those differences were compounded this week when the administration’s Director of the Office of Budget and Management announced that the state should expect almost $1 billion less in the new biennium than earlier predicted. As is the tradition, the conference committee will publicly meet, but hear very little, if any, public testimony. Testimony is limited in this forum to invited witnesses, mostly state agency experts. The Director of OBM made his announcement of lower estimates in such testimony. Those new estimates were backed up by similar numbers presented to the committee by the Legislative Service Commission. The state’s Tax Commissioner, Tom Zaino, also appeared before the committee and asked that the committee complete its work by June 20. Though the committee has until June 30 to fashion a document that is acceptable to the majority of both chambers, working toward such an agreement until then would mean the state could not implement the sales tax contained in the bill until August 1. The state says it needs about two weeks to notify vendors of changes in the sales tax rate and vendors need time to reprogram cash registers for the new rate. The state also traditionally starts such rate changes on the first of the month. Missing the June 20 date would thus push the new rate back from July 1 to August and result in a further reduction of revenue estimates for the biennium. Whether such a deadline can be met in what is expected to be one of the most contentious conference debates in years is anyone’s guess. The Conference Committee is scheduled to continue its public meetings next Monday at 4:00 p.m. The more entertaining meetings among leadership, the administration and conferees will occur between now and then. Unfortunately, none of us are invited. Darn it! Municipal Tax Negotiations Continue. **********ACTION CALL********** Though progress was made on a number of issues this week, through a negotiation facilitated by Senator Ron Amstutz, the League, the Tax Department and business interests failed to reach an agreement on the key point of the negotiations. That point is whether it is fair to declare a municipal tax holiday for those who will receive millions of dollars in deferred compensation in the future. The issue is simple. The League and other municipal officials agreed to create a uniform withholding base that for employees would also be the uniform tax base for the municipal income tax. From the point of view of the Tax Commissioner, the Ohio Chamber of Commerce and others that meant that, from the date of enactment, anything that doesn’t show up in that withholding base is tax-free. From the League’s view that meant that only compensation in the withholding base could be taxed, unless the compensation was earned prior to that enactment date. Thus nonqualified deferred compensation, a bonus plan set up for highly compensated executives and not deductible at the federal level, became an issue. The administration and business interests want the millions of dollars of deferred compensation already set aside to never be subject to the municipal tax. Retire today and your nonqualified deferred comp is taxed by those communities who tax when you receive the pay out. Retire tomorrow and, presto zippo, all the municipal services, the time the fire department saved your house from burning and the years the police department kept your neighborhood safe, are free. Not free to anyone else, but free to you because you make enough money that you can stash away bucks far beyond the "stingy" limits of a 401 (k). Don’t Know if We Can Afford Too Many More "Tax Reforms." Having written above that the "tax reform" will cost municipalities money if a tax holiday is declared for business executives and seeing what is in the Senate version of the budget, one would not be too cynical to believe that when the state says tax "reform," it means reducing someone else’s revenues. Within the Senate version of the budget are provisions to eliminate local reimbursement for the $10,000 Business Person Property Tax, acceleration of the elimination of the Inventory Tax and reduction in the taxable value of new manufacturing machinery over a 10-year period. And how can the State be so generous and reform-minded in these tough budgetary times? Easy. These changes will only hurt local governments and schools. At full implementation, these reforms will cost the state nothing. On the other hand, they will cost school districts and local governments a total revenue loss of $805 million annually. Unlike changes made in the past, on these and other similar taxes, this reform comes with no means of reimbursing the schools and local government for these losses. And why not? Because, as anyone not caught in a snow bank for the past two years knows, the STATE CAN’T AFFORD IT! Municipalities can afford to give a tax holiday to business executives. Schools and other local governments can afford to fund business tax reform. But the State can only think up tax reforms, not fund them. Please, call or write your members of the General Assembly and tell them we can’t afford too many more of their "tax reforms." Election Bill Supported. This week, Sue Cave, the League’s Executive Director, testified in favor of HB 164 (Setzer). This legislation would clarify signature language in the election law for referendums and change the number of signatures needed for referendums from 10% of the last municipal election to 25%. During her testimony, members of the State Government Committee mentioned that they had not heard from the municipal officials who wanted this legislation nor had any of those officials appeared before the committee. While the League often testifies for our members, it is extremely helpful for those officials who are interested in this legislation to let members of the committee know of your interest. It helps us and, perhaps more importantly, it helps the sponsor generate interest in the legislation. HB 164 is not scheduled for a hearing this week and thus will not likely receive any more hearings until the General Assembly returns in the fall. Contractor Licensing Bill has Third Hearing HB 175, sponsored by Rep. Buehrer, has had it’s third hearing. The legislation is billed as a contractor licensing bill, but it also contains a provision dealing with the establishment of a statewide uniform building code for residential buildings. Rep. Buehrer, in his testimony, said the bill creates licensing standards for residential contractors that are in line with those of commercial contractors. The standards will govern plumbing, electrical and hvac. The bill, as stated by the Rep. Buehrer, does not create a specific residential building code for the construction of 1-2-3 family structures. The bill however, does create a committee of professional and residential building experts to establish a building code that will ultimately be adopted for statewide use. The committee would be called the Residential Construction Advisory Council. So although the state at this time would not adopt a uniform statewide building code a mechanism would be in place to generate said code and then has a code that would be adopted by the Board of Building Standards. The bill is scheduled to be up for another hearing next week, if you would like to testify. (See Committee Schedule) If you would like a copy of the bill or an analysis you may obtain them at www.legislature.state.oh.us. SENATE/HOUSE COMMITTEE MEETING SCHEDULE FOR WEEK OF JUNE 16, 2003 BUDGET BILL (HB 95) CONFERENCE COMMITTEE, 4 p.m., Hearing Rm. 313, Chr. Calvert, Phone: 466-8140. HB 95 BIENNIAL BUDGET (Calvert) Levies taxes and provides for implementation of those levies, makes operating appropriations for the biennium beginning July 1, 2003, and ending June 30, 2005, and provides authorization and conditions for the operation of state programs. (2nd Hearing) TUESDAY, JUNE 17 BUDGET BILL (HB 95) CONFERENCE COMMITTEE, 9 a.m., Hearing Rm. 313, Chr. Calvert, Phone: 466-8140. HB 95 BIENNIAL BUDGET (Calvert) Levies taxes and provides for implementation of those levies, makes operating appropriations for the biennium beginning July 1, 2003, and ending June 30, 2005, and provides authorization and conditions for the operation of state programs. (3rd Hearing) HOUSE COMMERCE & LABOR, 1:30 p.m., Rm. 121, Chr. Young, Phone: 644-6074. HB 208 RETAINAGE PERCENTAGE (Young) Modifies provisions governing the practice of withholding a percentage of payment from contractors, subcontractors, and material suppliers in the form of retainage. (2nd Hearing - Proponent, opponent & interested party - Possible vote) HOUSE STATE GOVERNMENT, 3 p.m., Rm. 122, Chr. Carmichael, Phone: 466-1474. HB 181 ELECTED OFFICIAL SUSPENSIONS (Schaffer) Permits the Governor to suspend from office in accordance with a specified procedure any elected local official charged with a felony related to the official’s administration of, or conduct in the performance of the duties of, the office and prohibits a person who is convicted of certain theft offenses, or any other felony or recent misdemeanor involving fraud, deceit, or theft, from holding a public office or position of public employment, or serving in certain unpaid volunteer positions, that involve substantial management or control of certain public or private property. (4th Hearing - Proponent & opponent & interested party) HOUSE HOMELAND SECURITY, ENGINEERING & ARCHITECTURAL DESIGN, 4 p.m., Rm. 116, Chr. Schaffer, Phone: 466-8100. HB 175 CONTRACTOR LICENSING (Buehrer) Requires statewide licensing of residential contractors, establishes a statewide uniform building code for residential buildings, establishes a process for granting variances from the statewide uniform residential building code, and makes other changes in the laws governing residential contractors and residential construction. (4th Hearing - Proponent, opponent & interested party) WEDNESDAY, JUNE 18 BUDGET BILL (HB 95) CONFERENCE COMMITTEE, 9 a.m., Hearing Rm. 313, Chr. Calvert, Phone: 466-8140. HB 95 BIENNIAL BUDGET (Calvert) Levies taxes and provides for implementation of those levies, makes operating appropriations for the biennium beginning July 1, 2003, and ending June 30, 2005, and provides authorization and conditions for the operation of state programs. (4th Hearing) PREDATORY LENDING STUDY COMMITTEE, 3:30 p.m., Rm. 116, Chr. Rep. Blasdel, Phone: 466-8022. Review of recommendations and discussion regarding the final report. THURSDAY, JUNE 19 PREDATORY LENDING STUDY COMMITTEE, 11:30 a.m., Rm. 018, Chr. Rep. Blasdel, Phone: 466-8022. |
