As Introduced

126th General Assembly Regular Session 2005-2006

H. B. No. 61

Representatives Driehaus, McGregor, Skindell, Miller, DeGeeter, Hartnett, Strahorn, Garrison, Otterman, Harwood 

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A BILL

To enact sections 101.91, 101.92, 101.921, 101.922,

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101.923, 101.924, 101.925, 101.926, and 101.927 of

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the Revised Code to provide for appraisal of the

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effectiveness of tax expenditures and for their

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expiration after appraisal if not renewed.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 101.91, 101.92, 101.921, 101.922,	6
101.923, 101.924, 101.925, 101.926, and 101.927 of the Revised	7
Code be enacted to read as follows:	8

Sec. 101.91. As used in sections 101.91, 101.92, and 101.921	9
to 101.927 of the Revised Code, "tax expenditure" means a	10
statutory provision, however denominated, that exempts certain	11
persons, property, goods, or services, in whole or in part, from	12
the operation of a tax.	13

Sec. 101.92. A tax expenditure created on or after April 15,	14
2005, expires at the end of the thirty-first day of December of	15
the fifth year after the year in which it was created, unless,	16
before its expiration date, it is renewed under section 101.922 of	17
the Revised Code. A tax expenditure does not apply to taxable	18
years that begin in the year the tax expenditure expires.	19

Sec. 101.921. An act creating a tax expenditure shall	20
specify:	21

(A) The purpose served by the tax expenditure;

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(B) The date on which the tax expenditure expires;

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(C) The class of taxpayers that will benefit from the tax	24
expenditure; and	25

(D) Methods to be used to appraise the tax expenditure's	26
effectiveness in serving its purpose.	27

Division (D) of this section may be fulfilled by applying	28
general statutes or by enacting statutory provisions that apply	29
particularly to the tax expenditure.	30

Sec. 101.922. The general assembly may renew a tax	31
expenditure by enacting an act that:	32

(A) Addresses only that subject;

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(B) Fulfills the criteria specified in section 101.921 of the	34
Revised Code, including specifying a new expiration date for the	35
tax expenditure; and	36

(C) Improves the tax expenditure's effectiveness in serving	37
its purpose; redefines the tax expenditure's purpose to serve or	38
better serve a public need; retains or improves the statutes that	39
enhance, or amends or repeals statutes that impede, the tax	40
expenditure's effectiveness in serving its purpose; improves the	41
tax expenditure's effectiveness in promoting economic growth and	42
development; reduces the amount of revenue lost as a result of the	43
tax expenditure; or re-enacts the tax expenditure to continue it	44
without change.	45

Housekeeping repeal of a tax expenditure that has expired	46
shall not be combined in an act renewing a tax expenditure.	47

Sec. 101.923. Not later than the date that is twenty-four	48
months before a tax expenditure expires, the tax commissioner	49
shall notify the tax expenditure sunset review committee of the	50
tax expenditure's expiration. The committee thereupon shall	51
prepare a schedule for appraising the tax expenditure so that the	52
appraisal and the report required under section 101.926 of the	53
Revised Code will be completed not later than the date that is	54
twelve months before the tax expenditure expires. The schedule	55
shall provide for a public hearing on the tax expenditure. The	56
committee chairperson shall send a copy of the schedule to the tax	57
commissioner, and the commissioner shall publish the schedule in	58
the register of Ohio.	59

Sec. 101.924. (A) For each tax expenditure scheduled for	60
appraisal by the tax expenditure sunset review committee, the tax	61
commissioner, and any other state official responsible for	62
administering the tax expenditure, shall submit to the committee a	63
report that:	64

(1) Explains the tax expenditure's purpose;

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(2) Expresses an opinion as to the public need for the tax	66
expenditure;	67

(3) Expresses an opinion as to whether the tax expenditure	68
has been impeded or enhanced by existing statutes;	69

(4) Describes how, if at all, the tax expenditure promotes	70
economic growth and development;	71

(5) Provides an estimate of the amount of tax revenue lost	72
each fiscal year as a result of the tax expenditure;	73

(6) Expresses an opinion as to whether the tax expenditure	74
should be allowed to expire or be renewed;	75

(7) Contains any other information relevant to the	76
committee's appraisal of the tax expenditure.	77

The report shall be submitted to the committee on or before	78
the date scheduled for the tax expenditure's public hearing under	79
section 101.923 of the Revised Code.	80

(B) Each year, beginning in 2005, the legislative service	81
commission shall prepare and submit to the committee a report that	82
describes each tax expenditure created on or after April 15, 2005,	83
or renewed under section 101.922 of the Revised Code; identifies	84
the tax expenditure's intended purpose; and appraises the tax	85
expenditure's effectiveness using the methods prescribed in the	86
act creating the tax expenditure.	87

Sec. 101.925. At the time and place specified in the	88
schedule, the tax expenditure sunset review committee shall hold a	89
public hearing on the tax expenditure, at which any person may	90
present testimony or tangible evidence relevant to the tax	91
expenditure. After the hearing, the committee shall appraise the	92
tax expenditure. In making its appraisal, the committee shall	93
consider the reports submitted under section 101.924 of the	94
Revised Code and knowledge gleaned from the hearing, but is not	95
limited to these sources. Upon the committee's request, the	96
department of taxation, office of budget and management, and any	97
other state agency shall provide the committee with any	98
information in its possession the committee requires to appraise	99
the tax expenditure. The legislative service commission shall	100
provide drafting and clerical support to the committee.	101

Sec. 101.926. The tax expenditure sunset review committee	102
shall prepare a report of its appraisal of a tax expenditure that	103
contains:	104

(A) A statement of the purpose served by the tax expenditure;

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(B) An appraisal of the tax expenditure's effectiveness in	106
serving its purpose;	107

(C) An evaluation of whether the tax expenditure's purpose	108
serves a public need;	109

(D) An evaluation of whether other statutes have enhanced or	110
impeded the tax expenditure's effectiveness in serving its	111
purpose;	112

(E) An appraisal of whether the tax expenditure promotes	113
economic growth and development;	114

(F) An estimate of the amount of revenue lost each fiscal	115
year because of the tax expenditure;	116

(G) A recommendation as to whether the tax expenditure should	117
be allowed to expire or be renewed; and	118

(H) Any other information the committee considers relevant.

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In an appendix to its report, the committee shall include a	120
draft of a bill that would implement its recommendation under	121
division (G) of this section and, if the tax expenditure is	122
recommended for renewal, section 101.922 of the Revised Code. If	123
the committee recommends renewal of the tax expenditure, the	124
appendix shall include a commentary to the bill draft explaining	125
how renewal of the tax expenditure will fulfill the criteria	126
specified in division (C) of section 101.922 of the Revised Code.	127

The committee shall provide a copy of the report to the	128
governor, the tax commissioner, the director of budget and	129
management, and each member of the general assembly. The report is	130
a public record.	131

Sec. 101.927. There is hereby created the tax expenditure	132
sunset review committee composed of nine members. The president of	133
the senate, within fifteen days after the first day of the first	134
regular session of the general assembly, shall appoint three	135
members of the senate to the committee, not more than two of whom	136
are members of the same political party. The speaker of the house	137
of representatives, within fifteen days after the first day of the	138
first regular session of the general assembly, shall appoint three	139
members of the house of representatives to the committee, not more	140
than two of whom are members of the same political party. The	141
governor, within fifteen days after the first day of the first	142
regular session of the general assembly and with the advice and	143
consent of the senate, shall appoint three members to the	144
committee, not more than two of whom are members of the same	145
political party.	146

Legislative members of the committee hold office until their	147
successors are appointed or until they earlier cease to be members	148
of the senate or house of representatives, as the case may be.	149
Members appointed by the governor hold office for terms ending on	150
the thirty-first day of December of each even-numbered year. A	151
member appointed by the governor continues to hold office after	152
the expiration of the member's term until the member's successor	153
is appointed, or until thirty days have elapsed, whichever occurs	154
first.	155

In the first regular session of the general assembly, the	156
committee shall elect a member of the house of representatives as	157
chairperson of the committee and a member of the senate as	158
vice-chairperson of the committee. In the second regular session	159
of the general assembly, the committee shall elect a member of the	160
senate as chairperson of the committee and a member of the house	161
of representatives as vice-chairperson of the committee.	162

A vacancy on the committee shall be filled in the same manner	163
as the original appointment. A member appointed to fill a vacancy	164
occurring prior to the expiration of the term to which the	165
member's predecessor was appointed holds office for the remainder	166
of the unexpired term.	167

Members of the committee shall serve without compensation,	168
but shall be reimbursed for actual and necessary expenses they	169
incur in performance of their duties.	170

The committee shall meet as often as necessary to perform its	171
duties.	172

Five members of the committee constitute a quorum. The	173
committee shall not take any action without the concurrence of at	174
least five members. So long as a quorum is present, a vacancy on	175
the committee does not impair the ability of the remaining members	176
to perform the committee's duties.	177

Section 2. A tax expenditure in existence on April 15, 2005,	178
expires at the end of December 31, 2006, unless, before that	179
expiration date, it is renewed under section 101.922 of the	180
Revised Code. A tax expenditure in existence on April 15, 2005,	181
that expires does not apply to taxable years beginning in 2006.	182

Section 3. On or before January 1, 2006, the Tax Commissioner	183
shall prepare a list of the tax expenditures in existence on April	184
15, 2005, and shall provide a copy of the list to the chairperson	185
of the Tax Expenditure Sunset Review Committee. The Committee	186
thereupon shall prepare a schedule under section 101.923 of the	187
Revised Code for appraising the listed tax expenditures so that	188
the appraisal and the report required under section 101.926 of the	189
Revised Code will be completed not later than November 1, 2006.	190
The schedule shall provide for a public hearing on each tax	191
expenditure. The chairperson of the Committee shall send a copy of	192
the schedule to the Tax Commissioner, and the Tax Commissioner	193
shall publish the schedule in the Register of Ohio. On or before	194
the date scheduled for a tax expenditure's public hearing, the Tax	195
Commissioner, and any other state official responsible for	196
administering the tax expenditure, shall submit the reports	197
required under division (A) of section 101.924 of the Revised	198
Code. The Committee shall proceed to appraise the listed tax	199
expenditures under section 101.925 of the Revised Code, and to	200
report upon its appraisal of the listed tax expenditures under	201
section 101.926 of the Revised Code.	202

Section 4. (A) Not later than thirty days after the effective	203
date of this act, the Governor, with the advice and consent of the	204
Senate, shall make initial appointments to the Tax Expenditure	205
Sunset Review Committee under section 101.927 of the Revised Code.	206
The members thus appointed hold office for terms ending on	207
December 31, 2006. Thereafter, gubernatorial appointments and	208
terms of office shall be as prescribed in section 101.927 of the	209
Revised Code.	210

(B) Not later than thirty days after the effective date of	211
this act, the President of the Senate and the Speaker of the House	212
of Representatives shall make initial appointments to the Tax	213
Expenditure Sunset Review Committee under section 101.927 of the	214
Revised Code. The members thus appointed hold office for terms	215
ending as prescribed in section 101.927 of the Revised Code.	216