OML UPDATE AT-A-GLANCE
Here are the top things you need to know from this past week:
· On Wednesday, the Ohio House of Representatives passed HB 519, legislation that weakens enforcement efforts and compliance requirements for the filing of municipal income tax returns. The House passed the by a vote of 59-29, sending it to the Senate to begin the committee hearing process. Read more in the article below.
· On Wednesday, the House Insurance Committee held a second hearing on HB 512, sponsored by Rep. Abrams (R – Harrison) and Rep. Baldrige (R – Winchester) which would increase the employer contribution rates to the Ohio Police and Firefighter Fund (OP&F), costing Ohio’s cities and villages hundreds of millions of dollars. Committee Chairman Brinkman has not announced the committee hearing schedule for next week but the next hearing for the bill will be for opponent testimony. We will alert our members when the announcement is made for the next hearing. You can find the bill language HERE and the LSC Fiscal Analysis HERE. Read more in the article below.
· On Tuesday, the Ohio Supreme Court declined the appeal of the Buckeye Institute’s lawsuit against City of Columbus, ending the lawsuit in Franklin County and upholding the right of municipalities to collect income tax under Sec. 29 of HB 197, which instructed municipalities to continue withholding municipal income tax at a taxpayer’s place of work, even if the taxpayer is currently working from home in a different local jurisdiction due to the COVID-19 pandemic. By declining to accept jurisdiction of the appeal, the constitutionality of Sec. 29 is upheld in the previous rulings by the Tenth District Court of Appeals and the Franklin County Court of Common Pleas. Read more in the article below.
· On Monday, the Ohio Redistricting Commission adopted by a vote of 4-3 a new state legislative district map very similar to a previous map struck down by the Ohio Supreme Court as unconstitutional. On Wednesday, a three-judge federal panel decided not to intervene in the creation of state legislative district maps until April 20, which is the date by which a map is needed to successfully hold a primary election on August 2. As for Congressional district maps, on Tuesday, the Ohio Supreme Court established an abbreviated case schedule that apparently will ensure the latest Congressional district map adopted by the Commission will remain in place for the 2022 election cycle unless the federal court intervenes.
· Bricker & Eckler LLP is hosting the 14th Annual Construction Procurement for Public Entities in Ohio. This event is specifically designed for Ohio public owners and covers the project delivery methods available for public construction projects and when competitive bidding is required. Read more below for dates and registration information.
· Registration is open for the Municipal Finance Officers Association of Ohio (MFOA) 2022 Annual Conference! The conference will be held in-person Wednesday, May 18 through Friday, May 20. The event will be held at the Marriott Columbus Northwest located at 5605 Blazer Parkway in Dublin, Ohio. As always CPE, CPIM and FIA credit will be offered for participants. To learn more and to register, click HERE.
OHIO SUPREME COURT DECLINES APPEAL OF BUCKEYE INSTITUTE LAWSUIT CHALLENGING TEMPORARY MUNICIPAL TAX WITHHOLDING POLICY
On Tuesday, the Ohio Supreme Court declined the appeal of the Buckeye Institute’s lawsuit against City of Columbus, ending the lawsuit in Franklin County and upholding the right of municipalities to collect income tax under Sec. 29 of HB 197, which instructed municipalities to continue withholding municipal income tax at a taxpayer’s place of work, even if the taxpayer is currently working from home in a different local jurisdiction due to the COVID-19 pandemic.
By declining to accept jurisdiction of the appeal, the constitutionality of Sec. 29 is upheld in the previous rulings by the Tenth District Court of Appeals and the Franklin County Court of Common Pleas. We applaud the court’s upholding of the constitutionality of Sec. 29 of HB 197 and the right of municipalities to collect much-needed revenue during the economic upheaval caused by the COVID-19 pandemic.
In addition to seeking a declaration that Sec. 29 of HB 197 was unconstitutional, the Buckeye Institute was also seeking to allow taxpayers to file for refunds for tax year 2020 if they worked in a local jurisdiction other than their principal place of work due to the COVID-19 pandemic. HB 110, the state operating budget bill passed last spring, allows taxpayers to file for refunds under those circumstances for tax year 2021.
The Buckeye Institute still has similar lawsuits pending in Cuyahoga, Lucas and Hamilton counties. If there is a ruling in any of these other cases that contradicts the running of the Tenth District, the case could once again make its way to the Ohio Supreme Court to rule on the contradictory decisions. We will continue to keep our members updated on these other cases.
OHIO HOUSE PASSES MUNICIPAL INCOME TAX PREEMPTION LEGISLATION
On Wednesday, the Ohio passed HB 519, legislation sponsored by Rep. Roemer (R – Richfield) and Rep. Lanesse (R-Grove City) which would significantly interfere with the ability of Ohio’s cities and villages to appropriately enforce filing requirements of municipal tax obligations and disrupts the ability of municipalities to communicate directly with their taxpayers.
Last week, the House Ways and Means Committee adopted an amendment limiting the maximum fine for failure to timely file the required municipal tax return from the current level of $150 down to $25 or 50% of the tax due and limits the cap to 50% of the unpaid tax if the amount of the unpaid tax is less than $150. Additionally, the amendment mandates that all fees for first-time offenses be waived and that municipalities are prohibited from communicating with the taxpayer of any outstanding filing requirement until the six months after the original filing deadline, usually on or after October 15, if the taxpayer has requested and received a filing extension from the federal government. Committee members were told in testimony by the League at a previous committee hearing that 99% of Ohio’s municipalities do not receive notification or have access to information alerting them that their municipal taxpayer has received a federal extension. You can find the amendment HERE and the updated Legislative Service Commission (LSC) Analysis HERE.
The League does not support the amended bill and continues to object to the interference this bill will cause in the administration of the single largest revenue source for a city or village. We believe the $25 is too low to be an effective compliance measure for tax administrators to ensure uniformity and transparency for all their municipal filers. We also oppose the new preemption the bill would place upon municipalities by mandating that an automatic waiver be granted for a first-time offense as this is a matter of local control and that authority should be preserved and retained to the tax administrator’s discretion. The now-amended bill preserves the ambiguous and poorly written language which allows taxpayers who receive a communication from the city in error to recover “reasonable costs” against the municipality for such an egregious communication. This opens additional revenue loss and unnecessary micromanaging of municipal collection and enforcement efforts.
The League greatly appreciates the efforts of Rep. Sobecki (D – Toledo), who offered a floor amendment that would have required the state to tell municipalities when a taxpayer has filed for and received a federal extension. The House rejected the amendment.
The bill will now go to the Ohio Senate to begin the committee hearing process. We strongly encourage our members to continue to contact their state senators and urge their opposition to this bill.
SECOND HEARING HELD ON LEGISLATION INCREASING OP&F EMPLOYER RATE
On Wednesday, the House Insurance Committee held the second hearing for proponent testimony on HB 512. The bill, which is sponsored by Rep. Abrams (R – Harrison) and Rep. Baldrige (R – Winchester), would increase the required employer contribution rates to the Ohio Police and Firefighter Fund. Proponents including the Ohio Association of Professional Fire Fighters, the Ohio Police and Fire Pension Fund and the Fraternal Order of Police of Ohio testified in support of the bill. You can find all proponent testimony HERE.
The proposal would increase the rates that cities and villages pay for retirement contributions to the Ohio Police and Firefighter Fund to 26.5% for both police and fire, compared to the current contribution rates of 19.5% for police and 24% for firefighters. The increase would happen incrementally over five years. You can read the bill language HERE.
The cost of this increase would be borne by local governments and would total hundreds of millions of dollars. According to the Legislative Service Commission (LSC) Fiscal Analysis, “the estimated additional contribution costs for such employers statewide would be about $23.4 million in calendar year (CY) 2023: approximately $17.6 million for employing police officers and $5.8 million for employing firefighters. After the contribution rate increases are fully phased in in CY 2027, the estimated additional costs for employers statewide would be about $117 million per year."
Municipalities are still recovering from the economic impact of the COVID-19 pandemic and many cities across the state face continued revenue losses as employers institute permanent work-from-home policies. Even as the economic recovery is ongoing, municipalities are continuing to provide Ohioans and businesses with critical local services while facing uncertain revenue projections for the future and experiencing financial challenges related to inflationary increases.
There is a concerning narrative in certain conversations that irresponsibly portray Ohio local government’s fiscal concerns as having been resolved by recent actions taken by the federal government and that communities are free of financial challenges, both currently and into the future. While municipalities have received limited and bifurcated federal aid, those funds have only provided marginal and temporary stabilization for local budgets and in no way are resources that communities will be the beneficiary of into the future. Those revenues were meant to serve as critical, stop-gap stabilization efforts for businesses, communities and individuals and are temporary, one-time only sources of funding with significant restrictions placed upon their use through qualifying eligible categories of expenditures enforced by the federal government. HB 512 would create significant revenue loss and disruption for municipalities of every size in Ohio and will not address the challenges the supporters have identified as being the genesis for the legislative proposal.
We strongly encourage our members to continue to contact their members of their state legislative delegation (both House and Senate) and impress upon them the significant financial challenges HB 512 will cause for their municipalities and urge them to oppose this bill.
BRICKER & ECKLER TO HOST WORKSHOP ON CONSTRUCTION PROCUREMENT FOR PUBLIC ENTITIES
On Thursday, May 12 from 7:30 a.m. – 3:45 p.m., Bricker & Eckler LLP is hosting the 14th Annual Construction Procurement for Public Entities in Ohio. This will be both an in-person and virtual workshop.
This event is specifically designed for Ohio public owners and covers the project delivery methods available for public construction projects and when competitive bidding is required.
The morning session features a traditional presentation, with instruction from several Bricker & Eckler attorneys whose practices focus on construction and bidding. In the afternoon, attendees will work through fact patterns together and will interactively explore alternative delivery methods and review bidding issues, while receiving feedback from fellow participants and the presenters.
Limited in-person capacity is available. In-person tuition includes breakfast, lunch and handout materials. Option to attend virtually is also available. An early bird discount is available through April 12. If two or more people are attending from the same organization, contact Laura Schaller at lschaller@bricker.com for a discounted group rate.
This course has been submitted to the Commission on Continuing Legal Education for 6.50 total CLE hours instruction. Ohio Engineering CPD credit and EPA contact hours will be available upon request. To learn more and to register, click HERE.
OHIO EPA TO HOLD WEBINAR ON MANAGING CONTAMINATED SITES IN COMMUNITIES
On Tuesday, April 5 at 2 p.m., the Ohio EPA is hosting a webinar entitled “Ohio EPA’s Water Resource Restoration Sponsor Program (WRRSP) Year 2023 Updates and Highlights.” The WRRSP uses interest monies from Water Pollution Control Loan Fund (WPCLF) loan sponsor projects to fund preservation and restoration of aquatic habitat. Since 2000, more than $227 million has been awarded for 174 projects to protect and preserve some of Ohio’s highest water quality resources. Webinar attendees will get the scoop on what’s new, updates and highlights for program year including pre-nomination meetings, the program’s annual call for project nominations, sponsorship, pay request procedures, readiness-to-proceed criteria, the Agency’s new webpage, and more. Learn more and register HERE.
On Thursday, April 14 from 2 to 3 p.m., the Ohio EPA is holding a webinar to make local leaders aware of how contaminated sites are regulated to keep residents safe and what redevelopment opportunities exist. This webinar will explain the basics of environmental clean-up regulations, will provide an overview of liability, due care, land use restrictions, and will explain Brownfield funding assistance that is available. Learn more and register HERE.
UPCOMING MARCH AND APRIL OML/OMAA WEBINARS
On Thursday, April 14 from 11 a.m. to 12 p.m., the League and the OMAA are hosting a webinar entitled “Crisis Communications for Municipal Government.” Facing the news media can be nerve-racking even under the best conditions. Now imagine yourself in a crisis or emergency situation facing hostile reporters who want answers to their tough questions. What would you do? What do you say? This webinar will cover the basics of news media and the rules of engagement (what you should and shouldn't say). Get tips for composing an effective message and compiling a plan to advance that message using earned media tactics such as print, radio, TV and social media. By the end of this webinar, you’ll not only have a much better idea of what it feels like to face the media, especially in a crisis communication situation, you’ll have a summary of specific take-away points to help you face a crisis communications situation in real life.
Finally, on Thursday, April 28 from 11 a.m. to 12 p.m., the League and the OMAA are hosting a webinar entitled “Nuisance Abatement.” Ohio’s nuisance abatement law empowers municipalities to address properties with chronic code violations, as well as properties with chronic criminal activity. This webinar will provide a general overview of Ohio nuisance abatement law and a framework for its practical application in municipalities of all sizes. Learn more and register HERE.
BILLS OF MUNICIPAL INTEREST PASSED BY THE OHIO LEGISLATURE
· HB 175 – Ephemeral Streams. Sponsored by Rep. Hillyer (R- Uhrichsville) would deregulate certain ephemeral water features under various water pollution control laws. Earlier in the week during its fourth hearing before the Senate Agriculture and Natural Resources Committee, a substitute bill was adopted that narrows the scope of the bill by excluding only water features that are no subject to regulation by the U.S. Army Corp of Engineers under the Federal Clean Water Act. You can read the LSC Comparison Document HERE. The bill was also amended to:
o require the Ohio Dept. of Natural Resources (ODNR) to work with USEPA and the U.S. Department of Energy to develop a statewide underground injection control program for Class VI injection wells in order to receive primary enforcement authority in the state over those wells
o earmark $500,000 in FY 22 from the Special Projects line item in ODNR to provide weed harvesting operations at Indian Lake and re-appropriate unused funds for the same purpose in FY23.
The bill was passed by a vote of 25 to 8. The bill will now go back to the House for concurrence on amendments. The League is in support of this legislation.
COMMITTEE RECAP: BILLS OF MUNICIPAL INTEREST
· HB 372 – Building Inspections. Sponsored by Rep. Ray (R – Wadsworth) and Rep. Roemer (R – Richfield), would make changes to the law relating to building inspections. During its third hearing before the House Commerce and Labor Committee the bill was amended to increase the timeframe for expedited appeals from three to five days and increase the fee from $500 to $1,000. The League offered interested party testimony supporting the amendment increasing the timeframe for expedited appeals from three to five days. You can read the League’s testimony HERE.
· SB 196 – Building Inspections. Sponsored by Sen. Roegner (R – Hudson), would make changes to the law relating to building inspections. During its third hearing before the Senate Small Business and Economic Opportunity Committee, the Ohio Building Officials' Association and the Associated General Contractors gave opponents and interested party testimony respectively. The League is working with the bill sponsor and interested parties on this legislation.
· SB 225 – Tax Credits. Sponsored by Sen. Schuring (R – Canton), would temporarily modify the historic rehabilitation and the opportunity zone investment tax credits. During its first hearing before the House Ways and Means Committee, the bill’s sponsor explained that the bill would:
o Increase the Historic Preservation Tax Credit (HPTC) cap for rehabilitation tax credits $60 million per year to $120 million annually for FY22 and FY23.
o Increases the maximum annual credit that can be claimed for one project from $5 million to $10 million.
o Increase the amount of funds available for the Ohio Opportunity Zone Tax Credit from $50 million to $100 million dollars.
o Increases the tax credit for smaller municipalities with populations under 71,000 from 25% to 35% to ensure that smaller communities get their fair share of projects.
o Projects approved in FY21 can convert their previous credit to the bill’s enhanced version if their project has not started.
o Maintains the provision in current HPTC law that requires the project to generate a net revenue gain in state and local taxes.
The League is supportive of this legislation.
· SB 193 – Utilities. Sponsored by Sen. Williams (D – Cleveland), would prohibit political subdivisions from placing a lien on property for unpaid water charges. During its first hearing before the Senate Energy and Public Utilities Committee, the bill’s sponsor explained that current law does not place a minimum dollar amount on water or sewer lien and does not require notice to property owners to be certified and that the bill protects resident. The League is still looking into this legislation.
· HB 364 – Waterworks Infrastructure Improvement. Sponsored by Rep. Patton (R – Strongsville), would make changes to the application process for the waterworks infrastructure improvement surcharge. During its third hearing before the House Public Utilities Committee, the Ohio Chamber of Commerce testified in support of the bill, while the Ohio Consumers’ Counsel testified against the bill. The League is looking into this legislation.
· HB 463 – Health Districts. Sponsored by Rep. Stephens (R – Kitts Hill), would eliminate district advisory councils for general health districts, and transfer their duties and responsibilities to boards of county commissioners. During its first hearing before the House State and Local Government Committee, the bill’s sponsor said the bill would give county commissioners appointing authority and oversight of health district budgets. The League is still looking into this legislation.
· HB 331 – Law Enforcement. Sponsored by Rep. Smith (D – Euclid) and Rep. Blackshear (D – Dayton), would require certain law enforcement officers to wear a clearly visible badge and identification on their person while on duty. During its first hearing before the House State and Local Government Committee, the bill’s sponsor said the bill would increase oversight and accountability. The League is still looking into this legislation.
