HB 140
While Ohio municipalities generally do not rely on voted ad valorem property taxes as a primary source of funding, such taxes can serve as a useful part of a municipality’s revenue base, and state law, principally in Ohio Revised Code Section 5705.19, provides municipalities with many general and specific levy options. Those municipalities considering placing a new or renewal property tax levy on a future ballot need to be aware of the unfolding impact of House Bill (HB) 140 on how that must look.
Beginning with the May 2, 2023 election, HB 140 made significant changes to election procedures, the most challenging of which has been the changes to the ballot language that is presented to voters. To illustrate how these changes will appear on the ballot, the following table shows the prior ballot language for a new property tax levy under Ohio Revised Code Section 5705.25 compared to the ballot language as revised by HB 140.
Prior Ballot Language
An additional tax for the benefit of (name of subdivision) __________ for the purpose of (the purpose stated in the resolution) __________ at a rate not exceeding __________ mills for each one dollar of valuation, which amounts to (rate expressed in dollars and cents) __________ for each one hundred dollars in valuation, for __________ (number of years levy is to run, or that it will be levied for a continuous period of time).
HB 140 Revised Ballot Language
An additional tax for the benefit of (name of subdivision) __________ for the purpose of (the purpose stated in the resolution) __________ that the county auditor estimates will collect $_____ annually, at a rate not exceeding __________ mills for each $1 of taxable value, which amounts to $__________ for each $100,000 of the county auditor's appraised value, for __________ (number of years levy is to run, or that it will be levied for a continuous period of time).
The sample ballot language shows three significant changes made by HB 140. First, HB 140 requires that a municipality’s total estimated annual revenue from the levy be added to the ballot (excluding bond issues). Second, ballot language must now express the cost to the taxpayer per $100,000 instead of per $100. Third, the cost per $100,000 must be based on true value, referred to as the “county auditor’s appraised value,” instead of on assessed/taxable value, which is 35% of the appraised value (for real property only).
Even though county auditors and county boards of elections have now gone through two election cycles of using the revised ballot language required by HB 140, we have encountered a number of procedural problems with helping our clients place new and renewal property taxes on the ballot, including:
- Levy annual revenue estimates not being properly rounded off to the nearest $1,000;
- The cost per $100,000 not being properly rounded off to the nearest dollar;
- County auditors improperly subtracting rollback payments from the cost per $100,000;
- County auditors using out-of-date forms to make the required certifications; and
- Boards of elections attempting to use outdated, pre-HB 140 ballot language.
In short, HB 140 disrupted the standard procedures that everyone was used to, and the process of adapting to the new requirements has not been smooth.
Those municipalities seeking to avoid HB 140 compliance problems should be aware of potential missteps:
- Beware of trying to adapt and use old, pre-HB 140 election proceedings to satisfy the new requirements without engaging experienced legal counsel. Election proceedings used for renewal of a levy several years ago will not have the necessary HB 140 updates.
- Avoid having council pass multiple resolutions of necessity at different millage amounts and asking the county auditor to certify as to all such options. This significantly increases the odds of an improper amount being used in the resolution to proceed, which would keep the levy question off of the ballot if not corrected with the board of elections prior to the applicable filing deadline.
- Avoid trying to personally add the county auditor certifications into a draft resolution to proceed. Instead, rely on experienced legal counsel to review the county auditor certifications for HB 140 compliance and also to properly complete the resolution to proceed.
- When the board of elections asks you to review the draft ballot language, include experienced legal counsel in that process to ensure HB 140 compliance.
The Ohio Supreme Court is likely to insist on strict compliance with statutory election procedures, with no option to fix incorrect election proceedings once the election filing deadline has expired. If a county auditor or board of elections tries to avoid complying with the new HB 140 requirements, the municipality should insist on strict compliance with state law. Failure to do so could result in the levy being excluded from the ballot or subsequently challenged in a post-election contest.
AOS Guidance on Ballot Campaigns
On August 21, 2023, the Ohio Auditor of State (AOS) released campaign guidance for municipalities and other local governments seeking voted levies or bond issues: https://ohioauditor.gov/publications/docs/Ohio_Auditor_of_State_Levy_FAQs_Aug_2023.pdf.
The guidance is in the form of frequently asked questions (FAQs) relating primarily to Ohio Revised Code Section 9.03, which is not a new statute but has been at the forefront of ballot campaign conversations in recent years. One should note that charter municipalities and charter counties, as well as ADAMH boards, are not subject to the requirements of Section 9.03. Regardless, the FAQs provide helpful reminders to keep in mind when considering how the general public may regard municipal campaigns even when a municipality is not subject to the statute’s provisions.
Section 9.03 was first effective in 1998. It provides, in part, as follows:
…no governing body of a political subdivision shall use public funds to do any of the following…publish, distribute, or otherwise communicate information that does any of the following…
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supports or opposes… the passage of a levy or bond issue.
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compensate any employee of the political subdivision for time spent on any activity to influence the outcome of an election for any of the purposes described… this section does not prohibit the use of public funds to compensate an employee of a political subdivision for attending a public meeting to present information about the political subdivision's finances, activities, and governmental actions in a manner that is not designed to influence the outcome of an election or the passage of a levy or bond issue, even though the election, levy, or bond issue is discussed or debated at the meeting.
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… no person shall knowingly conduct a direct or indirect transaction of public funds to the benefit of any of the following…a political action committee.
The FAQs are oriented by topic, with examples and best practices included to aid public entities subject to Section 9.03, and acknowledge there are gray areas where a municipality may want to consult legal counsel. While the provisions of Section 9.03 will continue to be subject to interpretation, this article will focus on four principal areas of concern addressed in the FAQs.
Communications
Information shared via newsletters, social media and during in-person meetings may mention a levy or bond issue. However, such information must be neutral, verifiable and factual regarding the municipality’s current finances and facilities. Those communications should also be devoid of statements about supporting the municipality or voting yes. It is permissible to indicate what services or improvements may be curtailed or delayed should a levy or bond issue fail, but that information must be communicated in an objective, factual manner. Municipal officials and employees can attend meetings to share neutral and verifiable facts about the municipality’s current finances, but they should not advocate for or against a levy or bond issue at those meetings. Instead, they should let the campaign committee be persuasive and ensure the information the committee disseminates is completely independent of that provided by the municipality.
Municipal Resources
There is no minimum dollar threshold for a violation of Section 9.03 to occur, so municipalities subject to Section 9.03 should use caution when municipal resources are being used for levy and bond issue campaign purposes, keeping in mind that, technically, every cost can be calculated. Those resources include not just monetary funds but the things those funds provide, such as buildings, technology (including computers, software, phones and email), and employees. Follow the municipality’s building use policy if the campaign committee cannot find another place to meet, and provide anti-levy groups the same option. Use public entity email only to engage in ordinary business, such as responding to public records requests regarding the levy, and not to send materials that advocate for or against a levy or bond issue. Finally, campaign materials such as signs and literature must be stored off the municipality’s property.
Municipal Employees and Elected Officials
Section 9.03 does not prohibit any person using their own time to support or oppose a levy or bond issue. The published FAQs acknowledge that public employees and elected officials have a First Amendment right to engage in political speech, but in the words of AOS, that speech must occur “on their own time and own dime.”
The FAQs explain that public employees may engage in political speech when they are using accrued leave, such as vacation leave. Consistent with that guidance, an individual should avoid levy advocacy during the municipality’s business hours, at a municipality-related meeting, on municipal property, using municipal email or when being introduced as a municipal official.
Municipal officials and employees should also be aware of the appearances they create. For that reason, they should refrain from wearing levy-related buttons and shirts or having levy promotional materials on municipal property or at municipality-related events. Municipal employees should not wear their uniforms to solicit donations or campaign for a levy or bond issue, even outside of work hours, as it creates the perception that they are acting in their role as municipal employees. Again, municipal officials and employees should let the campaign committee do the promotional work and limit their personal efforts to those periods they are formally on their own time.
Outside Firms and Surveys
The restrictions mentioned above apply equally to the conduct of outside firms hired by the municipality, such as communications firms, design firms and survey research firms, since municipal funds are used to pay these contracts. Such firms may have a separate engagement with the campaign committee for campaign support, but those vendors must be careful not to blur the lines between municipal work and campaign committee work. Planning can and should evaluate levy or bond issue options, costs and related tax burdens, but that should occur factually, not with an eye toward gauging support of a levy or bond issue in terms of cost or type.
The FAQs provide helpful considerations for municipalities, not only when they have issues on the ballot but as they plan for those coming in the future.
The foregoing article is not intended to provide legal advice. Individuals should consult with legal counsel regarding specific questions and circumstances.
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