09/04/2015

Change in law ensures access to tax incentive information

By Dennis Hetzel, Executive Director

A provision placed in the mammoth state budget bill (House Bill 64) will ensure that Ohio journalists can report on the potential impact of tax breaks granted for economic development.

The budget bill is legendary for containing hundreds of provisions that have nothing to do with the budget, and this is one of them – but it’s a good outcome in this case. 

Under the change (Section 122.942 of the Ohio Revised Code), Ohio’s director of development services is required to estimate the total amount of tax revenues that the state could potentially lose as a result of credits approved by the state’s tax credit authority.  The director also is required to include the name and address of the taxpayer that will receive the benefit within 30 days after the incentive is approved.

I say “potentially lose” because the full impact doesn’t occur unless the recipient actually creates all the associated jobs. The loss of tax revenue from breaks granted to private businesses in 2013 was estimated at $63 million.  It should be noted that officials all seem to agree that the benefits far outweigh the “foregone revenue” if the incentives succeed.

The sponsor, Sen. Larry Obhof, R-Medina, said his purpose was to codify what has been a standard practice by state officials.  A controversy erupted in 2013 when officials decided to consider the value of tax credits as “trade secrets” and would no longer release them to the public. That decision, criticized by the ONA and others, was ultimately reversed by Gov. John Kasich.  (Click here for the Columbus Dispatch story.) The new provision goes into effect on Sept. 29.    

For a more detailed look at how these tax credits work, check out this story by the Cox Ohio newspapers.