04/27/2023

Ohio Houses Passes State Budget Bill

The Ohio House of Representatives passed its version of the two-year state operating budget bill on Wednesday, April 26th. The vote comes after two months of committee deliberations that culminated in a bill with bipartisan support. The spending measure contained hundreds of earmarks and policy changes, but below are some of the provisions of interest to county treasurers:

• Increases the LGF distribution percentage from 1.66% to 1.7%
• Increases the minimum a county can receive from the LGF from $750,000 to $850,000
• Indexes the homestead exemption to inflation
• Authorizes the 2nd and 3rd property tax foreclosure auction notices to be made online
• Exempts from property tax the value of unimproved land subdivided for residential development in excess of the fair market value of the undivided property
• Provides $500 million over the biennium for brownfield redevelopment ($175 M per year) and demolition ($150 M in FY24).
• Creates the Joint Committee on Property Tax Review and Reform, requiring it to submit a report to the General Assembly making recommendations on reforms to property tax law and authorizing it to hold hearings on pending legislation related to property taxation. Requires five senators and five representatives to be appointed to the committee.
• Allows a property owner to temporarily request an abatement or refund for property taxes paid in 2020 or 2021 if they were issued a covenant not to sue Ohio EPA in 2020 and they have a 10 year property tax abatement of remediated brownfield redevelopment land, if approved shortens the future benefit to 8 years.
• Allows statement of value of property before conveyance to be submitted to the auditor electronically
• Increases competitive bidding thresholds to $75,000 for counties, townships, municipalities, fire and ambulance districts, and airport authorities; allows it to increase annually by 3%.
• Requires counties with an alternative LGF distribution formula to review it every five years.
• Maintains the current $41 per hour rate charged to local governments and school districts for financial audits
• Provides the State Auditor's office the capacity to increase the number of tips investigated and special audits completed by the Special Investigations Unit
• Allows counties to use a credit card to pay for state licenses or certificates
• Requires the Dept. of Taxation to create a uniform rule prescribing an income-based way of valuing federally subsidized residential rental property; formula must account for one or two year operating income (rent), operating expenses (including vacancy losses, unpaid rent losses and repair or replacement contributions), a market-appropriate uniform capitalization rate plus tax additur for the property tax rate; the rules shall establish a minimum total value of 150% of unimproved land value
• Requires county auditors to use an income-based system for valuation of federally subsidized residential rental property; requires owners of federally subsidized residential rental property to file with the county auditor operating income of the property (rent), expenses (unpaid rent, property taxes, etc), contributions to repairs or replacement every three years 
  • Allows the county auditor to value federally subsidized residential rental property without regard to the formula if the property owner fails to timely file the required records
• Allows a parcel included in an existing municipal or township tax increment financing (TIF) exemption, either individually or as part of an incentive district TIF, to be removed from its current TIF and included in another incentive district TIF, provided the owner of the parcel hasn't paid any payments in lieu of taxes under the existing TIF arrangement
• Allows the legislative authority of a municipal corporation to extend the life of a TIF incentive district, created prior to 2006, by up to 15 years, provided certain notice, and agreement or waiver, conditions are met with respect to applicable school boards and notice is given to the county.
• Creates a state low income housing tax credit
• Eliminates county’s ability to adopt system of preference via resolution by the county commissioners for Ohio contractors and eliminates prohibition on granting a contract in violation of that system while it’s in place

The Senate will deliberate on the bill through mid June before passing its version of the spending plan. A conference committee will then convene to negotiate a final version to be sent to the Governor by June 30th.