Representatives of the County Auditors Association of Ohio and the County Commissioners Association of Ohio say they support legislation that would require the Tax Expenditure Review Committee to evaluate the effectiveness of local property tax credits.
House Bill 255 would require that the Tax Expenditure Review Committee periodically review each of the tax credits offered by counties and submit its findings in the Tax Commissioner’s biennial tax expenditure report.
The report would include information about the benefits and costs of a county’s tax credits as well as the revenue lost because of the credits. Currently, the report includes information on state tax credits, but not local ones.
Tax credits are a form of subsidies that exempt certain businesses from paying taxes as a way to entice them into doing business in a given region. Some subsidies are performance-based and require a business to first demonstrate success, while others are unconditional. Although officials often argue that this helps local economies, some critics have argued that they oftentimes distort the free market.
The county groups testified in front of the House Ways and Means Committee this week, arguing that expanding transparency on the tax credits will help officials know whether certain credits are effective.
John Honeck, a senior policy analyst for the County Commissioners Association of Ohio, said in his testimony that the bill would not require the review committee to look into every individual business that receives a tax exemption, but rather the broad categories of the exemptions to see whether they meet intended goals.
The legislation, Honeck said, is not arguing that any tax credits should necessarily be repealed, but only that they be evaluated. He said that this could be useful to find a problem, such as if circumstances and situations change to the extent that certain credits are no longer beneficial to the economy.
Speaking on behalf of the Ohio County Auditors’ Association, Union County Auditor Amanda Weaver told the committee that the legislation is broadly worded so that the Department of Taxation can review the credits in whichever way it thinks is best.
The department, Weaver said, has produced information about state tax credits for nearly a century, which has helped the General Assembly understand which credits benefit the economy and which ones do not. She said the tool, which benefits taxpayers, would be just as helpful on the county level.