Ohio: Legislation provides for several tax credit, exemption, and abatement programs

Blog Post

On June 28, Ohio Governor John Kasich signed 13 bills into law. Among them was Sub. H.B. 390 (HB 390), which provides authorization and conditions for the operation of state programs, and makes certain appropriations. 

These programs include the following:

The bill doubles the total amount of the refundable motion picture tax credits that may be awarded, from $40 million per fiscal biennium to $40 million per fiscal year, and makes them transferrable. Credits may be applied against a motion picture company’s commercial activities tax (CAT), financial institutions tax (FIT), or personal income tax (PIT). All FIT and PIT revenue, along with 75 percent of CAT revenue, is to be deposited into the General Revenue Fund. The maximum value of the credit is 30 percent of eligible expenditures.

The fiscal note estimates an annual General Revenue Fund loss of $20 million, $ 1 million of which will be passed on to local governments.

HB 390 exempts natural gas that a municipal gas utility sells to customers from state and local sales and use taxes. The fiscal note anticipates that retroactivity would likely apply only to the previous 48 months of state and local sales tax collections. 

The exemption will amount to about $6.9 million of foregone revenue for the previous 48-month period, and $2.1 million for the next 12 months. The General Revenue Fund would bear 96.64 percent of the revenue loss in fiscal year 2017. 

For a limited time, HB 390 permits the abatement of unpaid property taxes, penalties, and interest owed on property owned by a metropolitan housing authority that would have been tax exempt, but for the fact that certain tax-exemption procedures were not completed. In analyzing the fiscal impact, the Legislative Services Commission considered parcels in just two of the 75 public housing authorities, located in Mahoning County. It determined that in those two, the exemption could reduce their outstanding obligations by $2.3 million. 

In order to benefit from the abatement, the current owner of the applicable property must file an application with the Tax Commissioner no later than 12 months after the effective date of this provision. 

Because no county had ever taken advantage of the utilities service tax, enacted in 1967, HB 390 repeals it. 

HB 390 appropriates $12 million in capital funding from the Public School Building Fund to the Facilities Construction Commission. This is for grants to eligible public and chartered nonpublic schools (schools housed in buildings constructed before 1990) for reimbursement of up to $15,000 per school toward costs incurred on or after January 1, 2016, associated with replacing drinking fountains, water coolers, plumbing fixtures, and limited connected piping that are found to be a cause of lead above the federal action level in drinking water. 

The money may also be used to reimburse these schools for the cost of drinking water assessments performed by a commercial laboratory certified by the Ohio Environmental Protection Agency to perform chemical analysis on public drinking water that follow testing protocols consistent with U.S. EPA guidelines. 

Beyond these measures, HB 390 accomplishes the following:

• Creates an alternative fuel vehicle conversion program to be administered by the Director of Environmental Protection;
• Increases the amount appropriated to the Department of Rehabilitation and Correction in fiscal 2017 by a total of $18,008,972, allocated as follows:
  
  • Appropriations to Institutional Operations increased by $12,585,299, from $975,215,085 to $987,800,384;
  • Appropriations to Institution Medical Services increased by $5,211,763, from $249,000,000 to $254,211,763; 
  • Appropriations to Institution Education Services increased by $211,910, from $30,454,204 to $30,666,114.