Ohio Municipal League
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General Assembly Calls It a Wrap for the Summer

Last week, the Ohio General Assembly cobbled together a "budget corrections" bill (HB 770) acceptable to both houses and left Columbus for a recess that is expected to last until mid-September. The budget corrections bill started out routinely enough, but got bogged down at times over amendments ranging from school facilities funding to municipal taxation.

The municipal taxation issues were the legislative responses to the Cincinnati Bell v. Cincinnati court case. As mentioned before in the Bulletin, the Cincinnati case overturned the concept of implied preemption. The Supreme Court in a May 13 decision said that municipalities could tax the same types of activities as the state unless the General Assembly placed in statute an explicit preemption from municipal taxation on those types of activities. The case stemmed from the practice of the cities of Cincinnati, Blue Ash and the village of Fairfax to levy the municipal net profits tax on the profits of Cincinnati Bell, even though the company was also subject to the state's utility excise tax. The Legislature's response to the court decision was to put in statute an explicit preemption from municipal taxation not otherwise authorized by law all of the state's major taxes.

The policy of the General Assembly on this issue was to clearly allow municipal taxation in all areas traditionally occupied by municipal taxes. Thus the income tax and other areas which are taxed by both the state and municipalities are to be protected by the language inserted in HB 770. However, other taxes traditionally imposed by the state, but not municipalities (e.g. sales taxes), will continue along that same divide. At the urging of the League, the language inserted in HB 770 makes it clear that nothing in this preemption is meant to curtail municipal ability to levy admissions taxes.

While the League was primarily concerned about the clarity of the language to be inserted in the bill, there were other interests which seemed little hampered by such concerns. The first amendment added to the bill was the straight preemption language the General Assembly wanted. Then, at the urging of utility lobbyists, another amendment was added which can be characterized as one which says "Now, we really, really mean this preemption stuff and no municipality should try to find some way to retroactively send anyone a bill for past taxes." And then, finally, another utility-backed amendment was added that says, "Now if you ever find a way to ignore this law and still tax the net profits a utility company, the county auditor should offset any of your ill-begotten gains by deducting from the municipality's share of the state Local Government Fund an amount equal to your gains and give that money to all your neighbors in the county."

So despite the fact that there are about six different ways at the local level to get around this scheme to ban a municipality from levying a tax that would only help other subdivisions in the county, it is, according to the bill, in two different places, a tax which can't be levied at the local level anyway. The telephone companies also attempted to insert in the bill an amendment which would regulate to their satisfaction and benefit all local right-of-way ordinances and agreements. This amendment was vigorously opposed by the League and was rejected from the bill.

We're surprised we didn't see an amendment that barred municipal officials from even thinking about taxing a telephone utility.

Bid Bill Hung Up

HB 204 (Wachtmann), which would among other things increase the municipal bid limit from $10,000 to $15,000, was held up in the State and Local Government and Veteran's Affairs Committee of the Senate for lack of a quorum. The bill was originally scheduled for a second hearing and a vote last week, but because of a change in the Senate's schedule the committee could not meet at its scheduled time because members were not yet in town. The committee was cancelled and we will have to wait until September for action on this bill.

HB 434, which revises the state's Joint Economic Development District law, also could not reach the floor of the Senate for a vote. The only day possible for such a vote was the same day at the budget corrections bill and that session was limited to consideration of the budget corrections bill only.

Farmland preservation efforts also will linger in the legislature for awhile. Representative Gene Krebs has said that his omnibus preservation bill will undergo some redrafting over the summer. That bill is currently in the House Local Government and Townships Committee. Another bill (SB 223 - Drake) designed to allow for the purchase of farmland preservation easements in Ohio and attract some federal dollars for that purpose stalled in the House prior to recess.

Another major issue looming before the legislature is electric deregulation. There are companion bills in the Senate and House, sponsored by Senator Bruce Johnson and Representative Priscilla Mead. Though those bills received some attention before the recess, the activity around those bills is expected to pick up over the next few months. Senator Johnson has told the press that there may be a couple of summer hearings on this legislation.