As Introduced

127th General Assembly
Regular Session
2007-2008
H. B. No. 269


Representative Driehaus 

Cosponsors: Representatives DeGeeter, Dodd, Garrison, Hagan, R., Harwood, Healy, Letson, Lundy, McGregor, J., Otterman, Skindell, Strahorn, Ujvagi 

A BILL
To enact sections 5703.95, 5703.951, 5703.952, 1
5703.953, 5703.954, 5703.955, 5703.956, and 2
5703.957 of the Revised Code to provide for an 3
appraisal of the effectiveness of tax expenditures 4
and for their expiration after appraisal if not 5
renewed.6


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

       Section 1. That sections 5703.95, 5703.951, 5703.952, 7
5703.953, 5703.954, 5703.955, 5703.956, and 5703.957 of the 8
Revised Code be enacted to read as follows:9

       Sec. 5703.95. (A) As used in this section and sections 10
5703.951 to 5703.956 of the Revised Code:11

       (1) "Tax expenditure" means a statutory provision, however 12
denominated, that exempts certain persons, activities, 13
dispositions, property, goods, or services, in whole or in part, 14
from the operation of a tax.15

       (2) "Tax expenditure sunset review committee" means the 16
committee created under section 5703.957 of the Revised Code.17

       (B) A tax expenditure created on or after April 15, 2008, 18
expires at the end of the thirty-first day of December of the 19
fifth year after the year in which it was created, unless, before 20
its expiration date, it is renewed under section 5703.952 of the 21
Revised Code. A tax expenditure does not apply to taxable years 22
that begin in the year the tax expenditure expires.23

       Sec. 5703.951. An act creating a tax expenditure shall 24
specify:25

        (A) The purpose served by the tax expenditure;26

        (B) The date on which the tax expenditure expires;27

        (C) The class of taxpayers that will benefit from the tax 28
expenditure; and29

        (D) Methods to be used to appraise the tax expenditure's 30
effectiveness in serving its purpose.31

        Division (D) of this section may be fulfilled by applying 32
general statutes or by enacting statutory provisions that apply 33
particularly to the tax expenditure. 34

       Sec. 5703.952. The general assembly may renew a tax 35
expenditure by enacting an act that:36

        (A) Addresses only that subject;37

        (B) Fulfills all of the criteria in section 5703.951 of the 38
Revised Code, including specifying a new expiration date for the 39
tax expenditure; and40

        (C) Improves the tax expenditure's effectiveness in serving 41
its purpose; redefines the tax expenditure's purpose to serve or 42
better serve a public need; retains or improves the statutes that 43
enhance, or amends or repeals statutes that impede, the tax 44
expenditure's effectiveness in serving its purpose; improves the 45
tax expenditure's effectiveness in promoting economic growth and 46
development; reduces the amount of revenue lost as a result of the 47
tax expenditure; or re-enacts the tax expenditure to continue it 48
without change.49

       Housekeeping repeal of a tax expenditure that has expired 50
shall not be combined in an act renewing a tax expenditure.51

       Sec. 5703.953. Not later than the date that is twenty-four 52
months before a tax expenditure expires, the tax commissioner 53
shall notify the tax expenditure sunset review committee of the 54
tax expenditure's expiration. The committee thereupon shall 55
prepare a schedule for appraising the tax expenditure so that the 56
appraisal and the report required under section 5703.956 of the 57
Revised Code will be completed not later than the date that is 58
twelve months before the tax expenditure expires. The schedule 59
shall provide for a public hearing on the tax expenditure. The tax 60
commissioner shall publish the schedule in the register of Ohio.61

       Sec. 5703.954. (A) For each tax expenditure scheduled for 62
appraisal by the tax expenditure sunset review committee, the tax 63
commissioner, and any other state official responsible for 64
administering the tax expenditure, shall submit to the committee a 65
report that:66

        (1) Explains the tax expenditure's purpose;67

        (2) Expresses an opinion as to the public need for the tax 68
expenditure;69

        (3) Expresses an opinion as to whether the tax expenditure 70
has been impeded or enhanced by existing statutes;71

        (4) Describes how, if at all, the tax expenditure promotes 72
economic growth and development;73

        (5) Provides an estimate of the amount of tax revenue forgone 74
each fiscal year as a result of the tax expenditure;75

        (6) Expresses an opinion as to whether the tax expenditure 76
should be allowed to expire or be renewed;77

        (7) Contains any other information relevant to the 78
committee's appraisal of the tax expenditure.79

        The report shall be submitted to the committee on or before 80
the date scheduled for the tax expenditure's public hearing under 81
section 5703.953 of the Revised Code.82

        (B) Each year, beginning in 2008, the legislative service 83
commission shall prepare and submit to the committee a report that 84
describes each tax expenditure created on or after April 15, 2008, 85
or renewed under section 5703.952 of the Revised Code; identifies 86
the tax expenditure's intended purpose; and appraises the tax 87
expenditure's effectiveness using the methods prescribed in the 88
act creating the tax expenditure.89

       Sec. 5703.955. At the time and place specified in the 90
schedule prepared under section 5703.953 of the Revised Code, the 91
tax expenditure sunset review committee shall hold a public 92
hearing on the tax expenditure, at which any person may present 93
testimony or evidence relevant to the tax expenditure. After the 94
hearing, the committee shall appraise the tax expenditure. In 95
making its appraisal, the committee shall consider the reports 96
submitted under section 5703.954 of the Revised Code and knowledge 97
gleaned from the hearing, but is not limited to those sources. 98
Upon the committee's request, the department of taxation, office 99
of budget and management, and any other state agency shall provide 100
the committee with any information in its possession that the 101
committee requires to appraise the tax expenditure. The 102
legislative service commission shall provide drafting and clerical 103
support to the committee.104

       Sec. 5703.956. The tax expenditure sunset review committee 105
shall prepare a report of its appraisal of a tax expenditure that 106
contains:107

        (A) A statement of the purpose served by the tax expenditure;108

        (B) An appraisal of the tax expenditure's effectiveness in 109
serving its purpose;110

        (C) An evaluation of whether the tax expenditure's purpose 111
serves a public need;112

        (D) An evaluation of whether other statutes have enhanced or 113
impeded the tax expenditure's effectiveness in serving its 114
purpose;115

        (E) An appraisal of whether the tax expenditure promotes 116
economic growth and development;117

        (F) An estimate of the amount of revenue lost each fiscal 118
year because of the tax expenditure;119

        (G) A recommendation as to whether the tax expenditure should 120
be allowed to expire or be renewed; and121

        (H) Any other information the committee considers relevant.122

        In an appendix to its report, the committee shall include a 123
draft of a bill that would implement its recommendation under 124
division (G) of this section and, if the tax expenditure is 125
recommended for renewal, complies with the requirements of section 126
5703.952 of the Revised Code. If the committee recommends renewal 127
of the tax expenditure, the appendix shall include a commentary to 128
the bill draft explaining how renewal of the tax expenditure will 129
fulfill the criteria specified in division (C) of section 5703.952 130
of the Revised Code.131

        The committee shall provide a copy of the report to the 132
governor and to each member of the general assembly. The report is 133
a public record.134

       Sec. 5703.957. There is hereby created the tax expenditure 135
sunset review committee composed of seven members. The president 136
of the senate, within fifteen days after the first day of the 137
first regular session of the general assembly, shall appoint two 138
members of the senate to the committee, one from each political 139
party. The speaker of the house of representatives, within fifteen 140
days after the first day of the first regular session of the 141
general assembly, shall appoint two members of the house of 142
representatives to the committee, one from each political party. 143
The governor, within fifteen days after the first day of the first 144
regular session of the general assembly and with the advice and 145
consent of the senate, shall appoint one member to the committee. 146
The tax commissioner and the director of budget and management or 147
their designees shall be ex-officio voting members.148

        Legislative members of the committee hold office until their 149
successors are appointed or until they earlier cease to be members 150
of the senate or house of representatives, as the case may be. The 151
member appointed by the governor holds office for a term ending on 152
the thirty-first day of December of each even-numbered year. The 153
member appointed by the governor continues to hold office after 154
the expiration of the member's term until the member's successor 155
is appointed, or until thirty days have elapsed, whichever occurs 156
first.157

        In the first regular session of the general assembly, the 158
committee shall elect one of the members appointed from the house 159
of representatives as chairperson of the committee and one of the 160
members appointed from the senate as vice-chairperson of the 161
committee. In the second regular session of the general assembly, 162
the committee shall elect one of the members appointed from the 163
senate as chairperson of the committee and one of the members 164
appointed from the house of representatives as vice-chairperson of 165
the committee.166

        A vacancy on the committee shall be filled in the same manner 167
as the original appointment. A member appointed to fill a vacancy 168
occurring prior to the expiration of the term to which the 169
member's predecessor was appointed holds office for the remainder 170
of the unexpired term.171

        Members of the committee shall serve without compensation, 172
but shall be reimbursed for actual and necessary expenses they 173
incur in performance of their duties.174

        The committee shall meet as often as necessary to perform its 175
duties.176

        Four members of the committee constitute a quorum. The 177
committee shall not take any action without the concurrence of at 178
least four members. So long as a quorum is present, a vacancy on 179
the committee does not impair the ability of the remaining members 180
to perform the committee's duties.181

       Section 2. A tax expenditure, as defined in section 5703.95 182
of the Revised Code, as enacted by this act, in existence on April 183
15, 2008, expires at the end of December 31, 2008, unless, before 184
that expiration date, it is renewed under section 5703.952 of the 185
Revised Code, as enacted by this act. A tax expenditure in 186
existence on April 15, 2008, that expires does not apply to 187
taxable years beginning in or after 2009.188

       Section 3. The Tax Commissioner shall prepare a list of the 189
tax expenditures, as defined in section 5703.95 of the Revised 190
Code, as enacted by this act, in existence on April 15, 2008, and 191
shall provide a copy of the list to the chairperson of the Tax 192
Expenditure Sunset Review Committee created by section 5703.957 of 193
the Revised Code, as enacted by this act. The Committee thereupon 194
shall prepare a schedule under section 5703.953 of the Revised 195
Code, as enacted by this act, for appraising the listed tax 196
expenditures so that the appraisal and the report required under 197
section 5703.956 of the Revised Code, as enacted by this act, will 198
be completed not later than November 1, 2008. The schedule shall 199
provide for a public hearing on each tax expenditure. The Tax 200
Commissioner shall publish the schedule in the Register of Ohio. 201
On or before the date scheduled for a tax expenditure's public 202
hearing, the Tax Commissioner, and any other state official 203
responsible for administering the tax expenditure, shall submit 204
the reports required under division (A) of section 5703.954 of the 205
Revised Code, as enacted by this act. The Committee shall proceed 206
to appraise the listed tax expenditures under section 5703.955 of 207
the Revised Code, as enacted by this act, and to report upon its 208
appraisal of the listed tax expenditures under section 5703.956 of 209
the Revised Code.210

       Section 4. (A) Not later than thirty days after the effective 211
date of this act, the Governor, with the advice and consent of the 212
Senate, shall make the Governor's initial appointment to the Tax 213
Expenditure Sunset Review Committee under section 5703.957 of the 214
Revised Code, as enacted by this act. The member thus appointed 215
holds office for a term ending on December 31, 2008. Thereafter, 216
the gubernatorial appointment and term of office shall be as 217
prescribed in that section.218

        (B) Not later than thirty days after the effective date of 219
this act, the President of the Senate and the Speaker of the House 220
of Representatives shall make their initial appointments to the 221
Tax Expenditure Sunset Review Committee under section 5703.957 of 222
the Revised Code. The members thus appointed hold office for terms 223
ending as prescribed in that section.224