On March 11, 2014, Gov. John Kasich’s administration unveiled its second mid-biennium review budget bill (MBR). The bill, introduced as H.B. 472, highlights six major areas of interest for the administration, but includes many new policy and appropriation items. On Wednesday, March 12, Ohio House of Representatives Speaker William Batchelder (R-Medina) indicated that it is the House’s intent to divide the MBR into at least 11 bills, which would then be sent to committees for hearings. Below is a summary of the economic development components of the budget. Read this Bricker & Eckler publication for a comprehensive review of the MBR.
Incentive Requirements and Compliance
The MBR would establish August 1 as the uniform due date for reporting by recipients of state assistance through the Development Services Agency, the Ohio Venture Capital Authority, Third Frontier Commission, and the Ohio Coal Development Office. Additionally, the MBR would require businesses seeking research and development financial assistance in connection with a relocation to notify local governments that will be affected by their relocation before entering into an agreement with the State for the assistance. In the event that the recipient of a Research and Development Loan Tax Credit fails to comply with certain requirements related to its state assistance, the MBR would authorize the Development Services Agency to reduce the amount, percentage, and term of the tax credit. Finally, the MBR would authorize the Development Services Agency to access Department of Taxation information as necessary to verify information provided by incentive recipients and to ensure compliance with tax laws.
The MBR would reduce the value of certain job creation tax credits during their first year. Under continuing law, the value of a tax credit is equal to the income tax base revenue in the year at issue, minus the baseline income tax revenue in the twelve months before the Tax Credit Authority approves the project, multiplied by the tax credit percentage established by the Tax Credit Authority. The MBR would eliminate a provision in current law providing that the baseline income tax revenue in the first year in the first year of the tax credit is to be reduced in proportion to the number of days in the year prior the tax credit in which the tax credit recipient was not eligible for the tax credit. By eliminating this provision, the MBR would reduce the value of tax credits in their first year so that they will be based on the growth in income tax revenue for that year.
Municipal Tax Credits
The MBR clarifies that municipalities can offer job-creation tax credits and job-retention tax credits to employers, regardless of whether the employers also receive tax credit assistance from the Development Services Agency.