Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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STATE FUND |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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GRF |
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Revenues |
Indeterminate effect
dependent on number of conversions |
Indeterminate effect dependent
on number of conversions |
Indeterminate effect |
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Expenditures |
Indeterminate effect on
expenditures |
Indeterminate effect on
expenditures |
Indeterminate effect on
expenditures |
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SOS Business Services
Operating Fund (Fund 599) |
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Revenues |
Potential gain in UCC
filing fee revenues |
Potential gain in UCC |
Potential gain in UCC |
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Expenditures |
Potential increase in UCC
filing and processing costs |
Potential increase in UCC
filing and processing costs |
Potential increase in UCC
filing and processing costs |
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Note: The state
fiscal year is July 1 through June 30.
For example, FY 2007 is July 1, 2006 – June 30, 2007.
·
Establishes
a new form of cooperative business entity, the goal of which is to be similar
in tax treatment to a Limited Liability Company (LLC), and creates a procedure
under which existing corporations may convert to this new form.
·
There
could be some effect on GRF revenues, dependent on the number of cooperatives
that choose to convert to this new form.
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LOCAL
GOVERNMENT |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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County Courts |
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Revenues |
- 0 - |
- 0 - |
- 0 - |
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Expenditures |
Potential increase in
court costs |
Potential increase in
court costs |
Potential increase in
court costs |
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Local Government Funds |
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Revenues |
Indeterminate effect |
Indeterminate effect |
Indeterminate effect |
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Expenditures |
-0- |
-0- |
-0- |
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Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.
·
Permits
the judicial dissolution of a cooperative by an order of the court of common
pleas of the county in which the cooperative has its principal executive
office.
·
There
could be some effect on Local Government Fund revenues, dependent on the number
of cooperatives that choose to convert to this new form.
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Creation of new cooperatives
The bill authorizes the
establishment of a new form of agricultural cooperative business entity for any
lawful purpose. The existing Ohio
Cooperative Law provides that these associations are corporations deemed
nonprofit because they are not organized for the purpose of making profit for
themselves but for their members as patrons.
The new cooperative created under this bill is modeled after the
Minnesota Cooperative Association Act.
The structure of these new cooperatives would allow them to be taxed as
Limited Liability Companies (LLCs) due to the pass-through tax treatment. The LSC bill analysis details the purposes,
organization, governance of, and powers of the new cooperatives created in the
bill.
Impact of change in tax treatment
Given
the information available to LSC at the moment, it is unclear what the fiscal
impact of this change in tax treatment would be. Once provided more information from the Secretary of State's
office and the Department of Taxation, a better estimate can be made. Along with any effects on state GRF,
distribution to the local government funds might also be affected.
Secretary of State filings
The new cooperative
established in the bill will be required to pay filing fees to the Secretary of
State’s (SOS) office. The required
filing fees are $60 for the filing of the articles of a cooperative, $500 for filing
a curative filing of the articles of the cooperative, and $35 for all other
filings required under R.C. Chapter 1770 (which includes amendment of the
articles and certificates of merger, consolidation, conversion, division, or
dissolution). Curative filings are required
when the SOS determines that a filing has been made in error by a
cooperative. The SOS may revoke and
expunge the erroneous filing and authorize a curative document to be filed.
In addition to the above
filing fees, in each odd numbered year, a cooperative must file a biennial
registration with the SOS. The SOS is
required to establish procedures for the biennial registration, and mail this
registration form to each cooperative.
In the event that a cooperative has failed to file a registration, it will
be dissolved by the SOS. The SOS must
also annually inform the Attorney General and Tax Commissioner in writing of
the dissolved cooperatives.
The creation of this new
form of cooperative will likely not result in any net revenue gain or losses
for the SOS. Any revenues collected
through filing fees will likely be offset by the expenses the office will incur
from the requirements stated in the paragraph above. It is not known at this time how many of these new cooperatives
will be formed.
County court costs
The bill permits a
cooperative to be dissolved judicially and its affairs wound up by an order of
the court of common pleas of the county in Ohio in which the cooperative has
its principal executive office, in an action brought by members having 60% of
the voting power of the cooperative.
The procedure for this action is discussed in detail in the LSC bill
analysis. Presumably, there will not be
many instances of judicial dissolution for these new cooperatives, and
therefore, any additional costs to county courts would be minimal.
LSC fiscal staff: Terry Steele, Budget Analyst