September 05, 2019
September 05, 2019
$9.8 billion with more to come
by Wendy Patton and Zach Schiller
Ohio lawmakers underfund critical public services. Too few struggling families get help with the high cost of childcare Ohio’s low-wage economy. Public colleges and universities are unaffordable for students from working class families of all races. The school funding formula remains unconstitutional 20 years after the first lawsuit, still shorting many districts of aid. Meanwhile, lawmakers spend lavishly through the state tax code on tax breaks that often benefit narrow special interests. Next fiscal year, beginning July 1, 2020, Ohio will forgo nearly $9.8 billion in state tax exemptions, credits and deductions known as tax expenditures. The value of revenue lost to tax breaks will grow by $1.3 billion in 2020-21 compared to the prior two-year budget period, and will have grown by 18% over the decade between 2012 and 2021, adjusted for inflation. Today Ohio gives away more state resources in the general revenue fund (GRF) in tax breaks than lawmakers spend on health and human services.
Legislators considered creating, repealing or changing 27 tax break measures in House Bill 166, the budget bill for 2020-21. The Office of Budget and Management (OBM) and the Legislative Service Commission (LSC) did not quantify all of these, so a complete comparison of tax breaks created or expanded and those reduced or repealed is not possible. To the degree quantification is possible, it appears there is a modest gain in revenue of $13 million each year million amid the $9.8 billion given away annually in tax breaks.
The General Assembly let another opportunity to reduce unproductive tax breaks slip through its fingers with the Senate rejecting three reforms approved by the House. The House voted in its version of the budget bill to cut the business income deduction, a $1 billion annual tax break known as the LLC loophole that has not produced economic results. It also approved repeal of the motion picture tax credit and a cap on sales tax paid by wealthy buyers of timeshares in jet aircraft. Together, these measures would have saved more than $580 million in 2021, while adding fairness to Ohio’s tax system. However, the Senate largely rejected these, passing only a modest limitation of the LLC loophole.
There’s more. Lawmakers have piled on twenty-four additional tax break proposals for the General Assembly to consider this fall. Most have not been quantified by the LSC and only some will move ahead, but collectively, they represent millions more that potentially will not be available to fix the K-12 funding formula, make college more affordable, or invest in roads and bridges in our communities.
Often left out of discussions of the sheer volume of tax breaks is the multi-year tally of economic development tax credits already issued by the state. At the end of the 2020-21 biennium, $1.2 billion in tax credits is expected to remain outstanding, to be claimed in future years. Sometimes economic development tax credits entail significant risk, like the credit for venture capital loan loss, which guaranteed a return to investors in a public program for the riskiest type of investment. The program has failed to generate returns to cover debt service, since 2017, so state resources of $14.8 million a year are now used. Tax breaks that the legislature didn’t approve have been quietly slipped into conference committee deliberations. This includes the rural business investment credit, costing $45 million a year. Minimal oversight of tax breaks provides cover for risky use of state resources.
Some tax breaks have been in place since the 1930s. They grow over time with legislative changes and court decisions. But they are not regularly reviewed the way budget line items are. Both chambers of the General Assembly unanimously approved creating a Tax Expenditure Review Committee (TERC) in 2016. The committee met just three times in the last two years, giving but a cursory look at 15 tax breaks worth $5.7 billion a year and recommending they all continue without modification. In the budget bill for 2020-21 the General Assembly ignored one of the two other recommendations that did come out of the committee, that it: “Consider hiring additional assistance to aid in the review process.” Interest in tax expenditure review, however, is not entirely dormant. House Bill 255, introduced by Representative James Hoops and referred to the House Ways and Means Committee, would expand the responsibilities of the Tax Expenditure Review Committee to include local property tax exemptions.
Tax expenditures use public resources. They are a policy choice. Their rapid growth means less is available for basic public services, like good schools, safe bridges, and affordable college. Tax breaks often benefit the wealthy or corporations, which contributes to the upside-down structure of Ohio’s state and local tax code.
This report details the characteristics of Ohio’s tax expenditures, with a focus on the largest and the fastest growing. It examines changes in state tax breaks over the past two years and in the state budget and looks at the proposals for new tax breaks the General Assembly will consider in the fall. Appendices include technical information on definitions, provide a table on changes in the 2020-21 budget, and give a list of pending legislation.
We know about the state’s spending through the tax code because Ohio, like most other states and the District of Columbia, reports on tax exemptions, credits and deductions. Tax expenditures, also known as tax breaks or loopholes, lower the tax liability of individuals or organizations. By 2021, the state will forgo an estimated $9.8 billion due to 134 tax expenditures.
Some tax expenditures help nearly everyone (prescription drug sales tax break, personal exemption from the income tax), some help a targeted group (the manufacturing sales tax exemption, the sales tax exemption for churches and non-profits), some help certain individuals (the sales tax break on timeshares of private jets, which helps people who can afford to fly on private jets) or groups of companies (sellers of alcohol products who pay their taxes on time).
The Ohio Department of Taxation estimates Ohio’s tax breaks, details them in the Tax Expenditure Report, and submits the report to the General Assembly as part of the governor’s budget proposal. The estimates for value of tax breaks reflect the amount of financial benefit provided to recipients, adjusted to reflect the GRF’s share of the tax expenditure. They do not represent the amount that the state would immediately expect to gain if they were repealed, but instead, the revenue forgone – the taxation department’s estimate of revenue “spent” by the GRF because of the existence of a tax expenditure. The estimates reflect the financial benefit, adjusted to reflect the GRF’s share of the tax expenditure. (See Appendix 1 for detail on this point).
There are 60 tax expenditures in the sales tax, 37 in the income tax and 37 in other business, utility, finance, tobacco and alcohol taxes. Fifty-one Ohio tax breaks have a value of more than $20 million. Thirty-six tax have “minimal” value (less than $1 million). Figure 1 shows the shares and total estimated value of revenues forgone by type of tax in 2021.
Unlike spending in the budget, lawmakers’ spending through the tax code is not well scrutinized. Since its creation, the TERC’s performance has been underwhelming. It continued all 15 sales tax breaks it reviewed in 2017 and 2018, representing $4.5 billion in forgone state revenue and $1.1 billion in forgone local revenue. More than half the items lacked supportive testimony and the LSC failed to explain the original purpose for all the items under consideration. Committee members recommended that the legislature “consider hiring additional assistance to aid in the review process,” but the new state budget includes no funds to support it, and a new committee has not even been named.
The report for 2010-11 categorized tax expenditures by type of beneficiary. Using that framework to analyze the 134 items in the 2020-21 tax expenditure report reveals that the business and economic development category has the most tax breaks and biggest share of revenues forgone. The smallest category is for the public sector, churches and non-profits.
Tax breaks for business and economic development
Tax breaks that benefit individuals
Tax breaks for public sector and non-profits
Figure 2 shows the break-out of tax expenditures by who benefits: businesses, individuals and not-for-profits.
Materials and parts used in manufacturing goods
Sixty-four percent of the value of revenues forgone to tax expenditures benefit business and economic development. Of this, nearly half (44%) is for just one tax break: the sales tax exemption of materials and parts used in manufactured goods. The purpose of this tax break is to prevent a build-up or ‘pyramiding’ of sales taxes that would drive up the cost of goods manufactured or assembled in Ohio.
Although the table lists it one notch lower, the second largest tax break is the business income deduction, also known as the LLC Loophole. This tax break benefits owners of companies organized as pass-through businesses, so-called because tax liability on business earnings is not the responsibility of the firm but the owner, who pays through their personal income tax filing. It allows these owners to deduct 100% of income up to $250,000 and to pay a 3% rate on income over that, 37% lower than the state’s top income tax rate that would otherwise apply. The estimate for this tax break in Table 1 does not include the significant revenue forgone by the state because of the preferential top rate on earnings over $250,000. The Ohio Department of Taxation estimated that in Tax Year 2016, the LLC loophole was valued at $1.086 billion.
The LLC Loophole has contributed to the upside-down nature of Ohio’s state and local tax code. The poorest tax filers – earning $24,000 or less – pay almost twice the share of income in state and local taxes as the wealthiest 1%, who earn more than $496,000. During the 2020-21 state budget bill discussions, the House proposed capping it at $100,000 and eliminating the preferential top rate. The Senate did not do this, but they eliminated the preferential 3% tax rate. Governor DeWine, however, wanted neither change and the conference committee dropped these changes, making only minor adjustments (see section on tax break changes in the budget bill for more detail).
Distribution center exemption
The exemption to the Commercial Activity Tax (CAT) for purchases made by qualified distribution centers ranks as Ohio’s 15th largest, but its value is much greater than shown in the Tax Expenditure Report. Under this exemption, suppliers to distribution centers that buy at least $500 million a year in goods and ship at least half of them out of Ohio can avoid paying the CAT on what they send outside the state. Though the taxation department estimates the break will cost Ohio $169 million in Fiscal Year 2020 and $172.6 million in FY2021, the department says it is actually worth well over $500 million a year to those who receive it; which would make it Ohio’s fifth largest tax expenditure. In its analysis of the exemption, the department reduces the value by 70% because two companies owning large pharmaceutical distribution centers could shift that much of their activity outside Ohio if the exemption was not available to their suppliers. This tax break, 98.3% of which covers products of the pharmaceutical industry, has been continued despite lawsuits by the state of Ohio and numerous local governments against some of the same companies that benefit from the tax break for their role in the drug epidemic. Cardinal Health, the Dublin, Ohio based distributor, was the first company to make use of the tax break. It reported that none of the product from its Groveport warehouse ships within Ohio. Efforts by the Kasich administration to limit the break two years ago were unsuccessful.
Table 1 shows Ohio’s biggest tax expenditures, listed by size in state revenues forgone, year over year, for 2018 through 2020.
Sales tax break for medical equipment
The fastest-growing tax expenditure (between the last two-year budget and the 2020-21 budget), is a sales tax exemption on medical equipment, artificial limbs and prosthetic devices. Lawmakers widened the tax break to include prescription glasses and contact lenses. This will increase revenue lost by $78 million (121%) over the two-year budget period.
The name of the tax break indicates a purpose of helping people buy necessary eyeglasses. However, the break also applies to purchase of designer frames that could cost well over $1,000, a subsidy to the high-end eyeglass retailer. This kind of broad sales-tax exemption often cannot be targeted at those who really need it as doing so could violate the compact states join to make their tax structures similar in an age of online retail: The Streamlined Sales Tax Agreement. Seven states have enacted a sales tax credit for low-income people, which is a better approach. Maine, for example, has a refundable sales tax credit (called the Sales Tax Fairness Credit) for low- and middle-income Maine residents. The amount is tied to family size and income and gradually phases out as income increases. For example, a married couple with two children with income below $40,000 would receive the maximum credit of $225. The credit is unavailable to families with incomes of $52,000 and above.
Expanded 529 accounts
The second-fastest growing tax expenditure is an income tax deduction for people who put pre-tax savings into an educational savings account called a 529 college savings account (named for the section of the federal tax code which permits a similar federal tax break). The deduction grew because Ohio doubled the size of the exemption from $2,000 a year to $4,000 a year and widened it to cover payment of private school tuition for K-12 education.
Broadening the 529 college savings account to cover private school tuition benefitted higher-income residents who can afford private schools. Yet Ohio’s formula funding for public schools, which educate more than 90% of the kids in the state, remains unconstitutional because of under-funding of lower-income districts. New bills in both houses could further widen Ohio’s 529 exemption.
The motion picture tax credit
Table 2 shows the 20 fastest growing tax expenditures with a value greater than $20 million in the Ohio Tax Expenditure Report, and how fast they will grow in the 2020-21 biennium compared to the prior two-year budget period for 2018-19. The Motion Picture Tax Credit ranks third with 74% growth. Ohio sets aside $40 million a year to compete with California’s spending of $330 million; Georgia’s $606 million and New York’s $420 million. These three states kept 75% of the film production market in the decade between 2007 and 2016 despite big changes in state tax credits. Over time, 14 states have ended or defunded their film subsidy. Tourism Commissioner Chelsea Ruby explained why legislators ended the West Virginia movie tax break: “What we’ve seen in the last decade of these programs is a classic race to the bottom….There are certain productions that require specific locations, but a majority of productions can be done anywhere, and those productions always chase the largest credit.” Today, of the five states that border Ohio, three – West Virginia, Indiana and Michigan – have no movie tax credit. The Ohio House voted to join them and eliminate Ohio’s $40 million annual tax credit program, but the Senate did not agree. The final 2020-21 budget bill kept the film tax credit and broadened its use to theater production.
Venture capital tax credit
A smaller tax credit related to the state venture capital program jumped from $0 in 2016 to $7.5 million in 2017 to $14.8 million a year in 2018. Venture capital is a risky business, and returns on the investments made by the program were not sufficient to cover the debt service on initial financing. Program administrators had claimed the program would never cost taxpayers a dime, but it did. In 2017, the Columbus Dispatch reported that the state venture capital fund, managed by an affiliate of Cincinnati-based Fort Washington Investment Advisors, needed about $15 million in taxpayer money to make bond payments. The article quoted Fort Washington official Steve Baker as saying: “This is the way the program is structured. No one thought it was going to be easy. No one thought there would be no risk.”
But risk emerged and is substantial. The $158 million principal on the program bonds, which mature in stages through 2029, is backed by $380 million in refundable tax credits.
This program is less accountable than it should be because tax breaks have such limited oversight. If this were a grant program instead of a tax expenditure, legislators would have to face the public over continuing losses in a rigorous hearing process. Careful, regular oversight would improve public understanding of spending through the tax code.
The exemption for products used in manufacturing is the largest tax exemption and the fastest growing in absolute amount (Table 3). Over time, individual tax breaks are changed, broadened, and extended through the courts and the General Assembly. There was a proposal to broaden the manufacturing tax exemption in the 2020-21 budget bill to include cleaning services and supplies. Another bill now under consideration would further widen this sales tax exemption to include trucks and vehicles that move finished goods.
Tax expenditures are not an inherent part of a state’s tax code. These are special benefits created through the political process and changed by legislatures or the courts over time. For example, while most states with a sales tax offer some kind of a manufacturing exemption, its form and effect stems from a political process that varies from state to state and over time. A memo provided to the TERC by the National Conference of State Legislatures highlighted differences in similarly-named tax exemptions among Ohio and its neighboring states.
In the tax expenditure report for 2018-19, there were 129 tax breaks; in the 2020-21 tax expenditure report, there were 134. New tax breaks include:
Two tax breaks were eliminated over the past two years. These were:
Legislators considered creating, repealing or changing 27 tax breaks among the many tax policy changes in the new state budget bill (lawmakers made four separate changes to one provision – the LLC Loophole – and considered more) and two to another. They adopted expanded, extended, repealed or reduced 19 of the 27. The governor vetoed two. The section below gives brief descriptions, provides biennial totals for those that were quantified by the Office of Budget and Management (OBM) or the Legislative Service Commission (LSC). Appendix 2 shows the annual estimates: we use OBM estimates where available and LSC estimates in other cases.
Six changes mean the state will forgo more revenues: Lawmakers adopted two new state-wide tax expenditures, expanded three and extended one. Not all were quantified but those that were will cost the state an additional $48.1 million in revenues over the biennium and cost local governments, at least $800,000 (most tax breaks that impact local government were not quantified).
Three new tax breaks totaling $56.9 million were proposed by either the Ohio House or the Senate during budget deliberations, but not enacted:
Six provisions affecting local property taxes were enacted, as described below. These do not affect the state budget and in many cases, neither OBM nor the LSC provided estimates of fiscal impact on local government. These include:
Lawmakers repealed four tax breaks and reduced one – the business income deduction - in four different ways. As a result of the changes, state revenues forgone will be reduced by $82.6 million over the biennium and school districts will bring in an estimated $22 million more.
Lawmakers considered but failed to repeal six tax breaks with an estimated value of $1.1 billion over the biennium. This includes two further reductions to the business income deduction that were considered but not adopted.
The governor vetoed two tax breaks. One was a property tax deduction to reduce taxes on homes in Hunting Valley, capping the amount property owners would pay to Orange City Schools. The other provision would have kept the taxable value of land divided for residential development at its pre-division value until construction begins.
Economic development tax credits are given over multiple years: The Job Creation Tax Credit, for example, offers 15-year terms. While the tax expenditure report shows projections for tax credit expenditures over the biennium, it does not quantify these long-term tax breaks. Governor John Kasich, in House Bill 49, the budget bill for 2018-19, said each budget bill must include an accounting of certain economic development tax credits outstanding at the end of each biennium. According to HB 166, the state will issue a total of $440.5 million in tax credits in 2020 and 2021. At the end of 2021, the state will have more than $1.2 billion in such tax credits outstanding. Table 4 shows the estimates provided in the budget bill:
Economic development tax credits should be monitored by the Tax Expenditure Review Committee to see if they are meeting their original purpose. The Job Retention Tax Credit, for example, was originally intended for the largest employers that anchored an entire supply chain. Lawmakers greatly loosened the break’s eligibility requirements in the 2020-21 budget bill. They also eliminated the state employment requirements which connected the subsidy to the number of jobs. This changes the nature of this tax credit.
Ohio policymakers should also review the recent agreement between the states of Missouri and Kansas to limit state incentives for companies relocating within the Kansas City area. Under a memorandum of understanding between the states’ governors, incentives are to be limited to “net new jobs created for relocating companies.” Governor Mike DeWine should initiate conversations with governors in neighboring states to see if we can duplicate this agreement to end unproductive raiding that does little to improve the overall economy.
Although the fiscal impact of most of these bills has not been quantified, the few that have would amount to possibly hundreds of million more dollars in state revenues foregone each year. Details are included in Appendix 3.
Senate Bill 95 poses particular risks. It is structured to allow Ohio to move swiftly and grant 30-year tax breaks for “Mega Deals,” like the faltering Foxconn deal in Wisconsin. There, the state legislature approved a $3 billion incentive package, but the factory never materialized on anything like that scale. A new report evaluates the changes that downsized the proposal from a mega deal to a big deal, and recommends renegotiating the state incentives. Senate Bill 95 would make such negotiation impossible by writing such provisions into law, allowing incentives that will take revenues from state and local governments for 30 years to move forward without legislative consideration or renegotiation rights.
Ohio’s tax expenditures make up a huge use of state resources: by 2021 they will amount to nearly $10 billion, 40% of state General Revenue Fund dollars in the main operating budget. They are growing at a rapid pace: 18% since 2012, adjusted for inflation. Tax expenditures continue to grow, with six new or expanded tax breaks enacted in the 2020-21 budget bill and others that may advance in the legislature. Many tax breaks are over 30 years old. While some are useful, some may no longer be needed. Some have grown and expanded far beyond their original purpose.
The people of Ohio deserve oversight of how lawmakers spend their resources, especially for risky propositions like the venture capital tax credit, which backed a public venture capital program that failed to live up to expectations and now costs the state $14.8 million a year. Legislators slipped the $45 million Rural Jobs Tax Credit into a corrections bill during conference committee. Lawmakers removed state employment requirements from the Job Retention Tax near the end of the 2020-21 budget deliberations. Those expenditures also deserves scrutiny.
Tax breaks lined up for consideration this fall pose further risk to state revenues. Senate Bill 95 would greatly expand state incentive programs for “mega-project” deals - like the faltering Foxconn deal in Wisconsin, which could cost that state billions and has yet to create jobs. Without careful and frequent reviews of tax expenditures, legislators can easily become bullish on economic development competitiveness. Lack of transparency obscures deals that go south, as in Wisconsin.
There is a clear need for careful and regular oversight of tax expenditures. The state needs to take the Tax Expenditure Review Committee more seriously and staff it appropriately. Some tax breaks clearly need to be repealed or limited. Lawmakers should support House Bill 255, a proposal to expand the tax expenditure report, and oversight of the TERC to local property tax exemptions.
Many tax expenditures benefit special interests while depriving the state of revenue. Today Ohio’s poorest pay nearly twice the share of their income in state and local taxes as the wealthiest, on average. Closing tax breaks like the LLC Loophole would help clean up this upside-down state and local tax structure. This would also allow the state to pay for badly needed services. Governor DeWine pledged in his campaign to expand the state’s child care assistance program to more low-wage working families, instead the legislature put hundreds of millions toward more income tax cuts. The state’s K-12 funding formula has been unconstitutional for 20 years because schools rely too heavily on local property wealth, causing unequal education quality between rich and poor districts. We could afford to fix the system but tax breaks and tax cuts drain the state of the necessary resources. After 15 years of neglecting many public services, many of which have been flat funded or cut, boosting investment to appropriate levels seems like an impossible job.
It is not. Rigorous oversight of state tax expenditures is a mark of fiscal responsibility. The governor pointed out that it is time to invest. A responsible, fair and balanced state tax structure is crucial to making the investments in public services that form the civic platform of our daily lives: clean water, safe roads and bridges, good schools, affordable public colleges and universities, safe and clean parks and beaches, and more.
Tax expenditures – also known as tax breaks or loopholes – lower tax liability for a person, business or other entity. The tax department’s estimates reflect the financial benefit provided to recipients, adjusted to reflect the General Revenue Fund’s share of the tax expenditure. Ohio’s tax expenditures will total $9.1 billion in 2020 and $9.4 billion in 2021, not including new tax breaks passed in the 2020-21 budget, after the tax expenditure report was issued.
There are differences between reporting on a “revenue forgone” basis and on a “revenue gain from repeal” basis. Ohio’s Tax Expenditure report uses a revenue forgone estimate. 
Ohio’s tax department uses “revenue forgone” in their estimates but the memos on estimates sometimes reflect include assumptions in addition to overlap. For example, on page 5 of the tax expenditure report, the taxation department states that it only adjusts estimates when more than one tax expenditure is available to a taxpayer for the same item or activity. Yet the department significantly reduced the amount shown for the qualifying distribution center exemption based on its assumption that companies “could shift as much as 70% of their distribution center activity if the QDC exclusion were not available to their suppliers.”
Tax expenditures may be exemptions, deductions, or credits that reduce the taxes a taxpayer – be it a company or a person – owes.
For an item to be in the tax expenditure report, it must meet all four criteria below:
Tax expenditures with similar legislation moving in both chambers
Tax expenditures passed by one chamber and referred to committee in the other chamber
Tax expenditure bills without companion legislation in the other chamber
Tax expenditure proposals addressed in state budget bills; may or may not continue to advance in the legislature
Tax proposals addressed in the state budget bill that will not continue in the legislature
 The state tax expenditure report projects a total of $9.8 billion in revenue lost to tax expenditures in 2021; see Ohio Department of Taxation, Tax Expenditure Report The State of Ohio Executive Budget for Fiscal Years 2020-2021 at https://bit.ly/2P7SG8z This does not include the many dollars the state authorizes local governments to give in property tax and other tax abatements.
 In 2021, the Ohio Legislative Service Commission forecasts the state will spend $7.7 billion on all health and human services (see historical expenditures and revenues Table 2 - State - Source GRF, LPEF, and LGF Expenditure History) and $9.8 billion on tax expenditures. See Ohio Tax Expenditure Report for 2020-21 at https://bit.ly/2P7SG8z.
 Schiller, Zach, “Closing the LLC Loophole,” Policy Matters Ohio, May 29, 2019, at https://bit.ly/31mWxRd
 “Investors to dip into tax credits once more, Gongwer News Service, July 19, 2017 at https://bit.ly/2MIOxWB; see also Martin C. Braun, “Ohio Taxpayers on the Hook as Venture Fund Can't Pay Bondholders,” Bloomberg LP, March 17, 2017 at https://bloom.bg/2nv5yqt. The figure of $14.8 million is from the Ohio Department of Taxation Tax Expenditure Report for 2020-21 at https://bit.ly/30Nj7RY
 Pilcher, James, “Controversial Ohio tax credit program back – and may pass this time,” Cincinnati Enquirer, November 28, 2017 at https://bit.ly/2MjgOCR; Jen Fifield, “How Savvy Financiers Pitch Complex Investment Programs,” Pew Charitable Trust, April 3, 2017 at https://bit.ly/2TLfZDC and “Enhanced Capital Launches Ohio Rural Business Growth Program, September 7, 2018 at https://bit.ly/2KHTQTG
 Patton, Wendy and Schiller, Zach, “Weak review: Tax Expenditure Review Committee should balance tax breaks against Ohio’s needs,” Policy Matters, June 4, 2018 at https://bit.ly/2rcxkIf. See also https://bit.ly/2ZGwqm6.
 Tax Expenditure Review Committee, November 2018 Report, p. 34
 See legislation text at https://bit.ly/2YYK47N
 In Ohio, the poorest pay almost twice the share of their income in state and local taxes as the wealthiest. See Patton, Wendy, “Ohio state and local taxes hit poor and middle-income families the hardest,” Policy Matters, Oct. 17, 2018, at https://bit.ly/2RctFJY
 This report does not include tax policy changes in 2020-21 budget other than tax breaks, such as new taxes on vaping and peer-to-peer car sharing, reduction in the base of the Financial Institutions Tax, language covering the municipal tax on profits, and others. Policy Matters wrote about major changes to the income tax, fuel taxes, and the collection of sales tax by out-of-state online retailers in an earlier report. See Schiller, Zach, “Ohio Taxes Shift Away from the Wealthy Again,” Policy Matters, August 8, 2019 at https://bit.ly/2MqnyyW; Policy Matters wrote about other changes in Schiller, Zach, “Ohio Taxes Shift Away from the Wealthy Again,” Policy Matters, August 8, 2019 at https://bit.ly/2MqnyyW
 Institute for Taxation and Economic Policy, State-by-State Tax Expenditure Reports, January 31, 2017 at https://bit.ly/2ZpiGRu
 See Ohio Department of taxation, Tax Expenditure Report, Op.Cit.
 Adjustments may be based on trends, changes in federal tax or budget laws, economic/behavioral effects, and other factors assumed by analysts.
 See Appendix 1 for a comparison of estimates of tax breaks repealed and revenues forgone.
 Tax Expenditure Review Committee, November 2018 Report, p. 34
 Brainerd, Jackson and Savannah Gore, National Conference of State Legislatures, NCSL Memo to Sen. Scott Oelslager on Regional Comparison of Select Sales & Use Tax Exemptions, May 8, 2018, at https://budget.ohio.gov/Budget/operating/doc/fy-20-21/TERCReportNovember.pdf
 Schiller, Zach, “Closing the LLC Loophole,” Policy Matters Ohio, May 29, 2019 at https://bit.ly/31mWxRd.
 Op. cit. Patton, October 2018
 Schiller, Zach, “Tax breaks should be reined in,” Policy Matters Ohio, May 4, 2017, at https://bit.ly/2ZfVhBb
 Ohio Taxation Department memo from Kira Steigerwald Jones, Tax Analyst, Tax Analysis Division, Feb. 23, 2018, to Gregory Siegfried, Executive Administrator, Tax Analysis & Legislation Divisions and Ernest Massie, Administrator, Tax Analysis Division.
 See Caruso, Doug and Marty Schladen, “Ohio sues opioid makers, distributors – while giving them large tax breaks,” The Columbus Dispatch, Aug. 12, 2019, at https://bit.ly/31L0Kgz
 Ohio Department of Taxation, Distribution Center Qualifying Certificate, Qualifying Year of January 1, 2019, though December 31, 2019, Cardinal Health National Logistics Center, at https://bit.ly/2N7agqC
 The definition of “prosthetic device” in Ohio Revised Code (ORC) 5739.01(JJJ), referenced below, was amended by S.B. 8, 132nd General Assembly, to include corrective eyeglasses or contact lenses sold on or after July 1, 2019. This estimate includes the amended definition. This affects the estimate of value for 11 months of FY 2020, and the full FY 2021. Ohio Department of Taxation memo to Gregory Siegfried, Executive Administrator, Tax Analysis & Legislation Divisions, from Kira Steigerwald Jones, June 6, 2018.
 Streamlined Sales Tax Agreement, Adopted Nov. 12, 2002, and Amended Through Dec. 14, 2018, Section 323, at https://bit.ly/2UVftSJ
 Institute for Taxation and Economic Policy, “Options for a less regressive sales tax in 2018,” at https://bit.ly/2P4Mhr2
 In response to changes made in federal law by the Tax Cuts and Jobs Act of 2017, Senate Bill 22 of the 132nd General Assembly changed the definition of eligible expenses from one defined in the Ohio Revised Code to one defined by section 529 of the federal Internal Revenue Code. Expenses now include K-12 private school tuition. This is from an internal memo of the Ohio Department of Taxation to Gregory Siegfried, Executive Administrator, Tax Analysis & Legislation, from Kenneth Frey, dated June 20, 2018; provided by e-mail from the Tax Department office of communications to Policy Matters. See also, Jackson, Victoria, “Fund public schools, not savings accounts for the rich,” Policy Matters, February 2018 at https://www.policymattersohio.org/files/news/529brieffeb2018.pdf
 Independent Fiscal Office, “Pennsylvania Film Production Tax Credit: An evaluation of program performance,” January 2019 at https://bit.ly/31fXAlT. Note that other states spend hundreds of millions – Georgia and Louisiana in particular – but have very small shares of the market, which is dominated by California and New York.
 Jarvis, Jake, “Governor Justice signs film tax credit repeal bill, The State Journal, February 5, 2018 at https://bit.ly/2WrpOud
 Patton, Wendy, “Budget Bite: Motion Picture Tax Credit, Policy Matters Ohio, May 31, 2019 at https://bit.ly/2WoGJtj
 How many Ohioans can afford tickets to these shows? In Columbus, October’s production of “Mean Girls” lists individual tickets ranging from $39 to $114. Many shows have higher prices. https://bit.ly/2HdkySc
 Ohio Department of Taxation memo to Gregory Siegfried, Executive Administrator, Tax Analysis & Legislation Divisions, from Ernest C. Massie, May 5, 2016.
 Glenn, Brandon, “Are the Ohio Capital Fund’s days numbered?” Med City News, April 18, 2011 at https://bit.ly/31IH2lW
 Williams, Mark, Ohio Taxpayers on the hook for venture capital fund, Columbus Dispatch, September 1, 2017 at https://bit.ly/2TyIm7W
 House Bill 175 of the 133 Ohio General Assembly; see https://bit.ly/2MdoUN5
 See Brainerd, Jackson and Savannah Gore, National Conference of State Legislatures, NCSL Memo to Sen. Scott Oelslager on Regional Comparison of Select Sales & Use Tax Exemptions, May 8, 2018, https://bit.ly/2L0jvWW. See also, Patton, Wendy and Schiller, Zach, Testimony to the Tax Expenditure Review Committee, April 11, 2018 at https://bit.ly/2UmPQeO
 Policy Matters wrote then: “The rural growth tax credit made it into the corrections bill for the 2018-19 Ohio budget among the final amendments added in Conference Committee. Similar programs have been expensive and unproductive in other states.” See Patton, Wendy, “Rural growth tax credit should be sent to the scrapheap,” Policy Matters, November 28, 2017 at https://bit.ly/2yRev0W
 Ohio Department of Taxation memo to Ernest C. Massie, Administrator, Tax Analysis Division, from Kenneth Frey, Tax Analysis & Legislation Divisions, August 6, 2018.
Ohio Legislative Service Commission, House Bill 510 of the 129th General Assembly, final bill analysis at https://bit.ly/34b1xcQ, cited in Schiller, Zach, “Billions in tax breaks, little accountability, Policy Matters, February 22, 2016 at https://bit.ly/2McUkU0
 Patton, Wendy, Testimony to the Senate Finance Committee, June 14, 2019 at https://bit.ly/2Mqi86Z
 Ohio Office of Budget and Management, “final HB 166 (132nd general assembly) FY 20-fy 21 budget bill as of: 7/31/2019: Tax Revenue Impact of House Bill 166 (FY 2020-2021 state operating budget) Revenue estimates by Ohio Dept of Taxation, in concert with Ohio OBM General Revenue Fund Impacts* ($ in millions), provided by OBM to Policy Matters Ohio.
 See Schiller, Zach, “Loopholes in a Loophole,” Policy Matters Ohio, October 18, 2018 at https://bit.ly/2HkZgCX
 Tobias, Andrew J., “Gov. Mike DeWine blocks stealthy budget change that would have helped Hunting Valley, cost Orange schools, Cleveland.com, July 19, 2019 at https://bit.ly/2Ngollr
 Prior to passage of the 2021 budget, ORC 122.171(2) defined an “eligible business” as one that: (1) employs at least 500 full-time employees or has an annual Ohio employee payroll of at least $35 million; and (2) either operates at the project site primarily as a manufacturer and makes at least $50 million in capital investments at the site during the required time period, or is primarily engaged at the site in providing significant corporate administrative functions and makes at least $20 million in capital investments at the site during the required time period. According to the Legislative Service Commission comparison document for HB 166, changes allow manufacturers to qualify for the credit if they make a capital investment over three years equal to the lesser of $50 million or 5% of the net book value of tangible personal property used at the project at the end of that three-year period and permit manufacturers to no longer meet minimum payroll or employment requirements, but allows the tax credit agreement to contain such requirements.
 Agreement between the state of Kansas and the state of Missouri for Promoting Economic Development in the Kansas City Region, Aug. 13. 2019. See also Hardy, Kevin, “’Sometimes common sense does prevail.’ Missouri, Kansas celebrate end of border war,” Kansas City Star, Aug. 13, 2019, at https://www.kansascity.com/news/business/article233725152.html
 “In 2017, the State of Wisconsin agreed to provide Foxconn with almost $3 billion in state incentives, for a flat screen manufacturing facility in Southeast Wisconsin. The originally planned facility was to involve a $10 billion investment, and 13,000 jobs at reported average salary of $53,875. Since then, the project has been significantly revised. The currently-planned Foxconn facility is reported to involve a $2 billion investment, and 1,500 to 1,800 jobs. Still to be determined is exactly what incentives Wisconsin will provide for the revised facility. One possible option is to continue the original incentive offer, but scaled back to reflect the lower amount of jobs and investment.” See Bartik, Timothy,” Costs and Benefits of a Revised Foxconn Project,” Upjohn Institute for Employment Research, July 31, 2019 at https://bit.ly/2Kwyclw
 Patton, Wendy and Zach Schiller, “Tax Breaks to Tighten, Trim or Trash,” Policy Matters Ohio, March 27, 2019, at https://www.policymattersohio.org/research-policy/quality-ohio/revenue-budget/tax-policy/tax-breaks-to-tighten-trim-or-trash
 Op. cit. Feb. 23, 2018, memo to Siegfried and Massie.
 Cummins, Philip A., Ohio Legislative Service Commission, Fiscal Note and Local Impact Statement, as introduced, at https://www.legislature.ohio.gov/download?key=11683&format=pdf
 Schiller, Zach and Patton, Wendy, Testimony on Senate Bill 39 before the Senate Finance Committee, May 21, 2019 at https://bit.ly/2KJBim1
 Patton, Wendy and Schiller, Zach, Testimony on Senate Bill 95 before the Senate Ways and Means Committee, May 21, 2019 at https://bit.ly/33PZElV
Cummins, Philip A, Ohio Legislative Service Commission, Fiscal Note and Local Impact Statement, as passed by the Senate, at https://www.legislature.ohio.gov/download?key=12073&format=pdf
 Cummins, Philip A., Ohio Legislative Service Commission, Fiscal Note & Local Impact Statement, SB 95, As Passed by the Senate, at https://www.legislature.ohio.gov/download?key=12073&format=pdf
 Ridzwan, Ruhaiza, Ohio Legislative Service Commission, Fiscal Note and Local Impact Statement, as introduced, at https://www.legislature.ohio.gov/download?key=11337&format=pdf.
 Ridzwan, Ruhaiza, Ohio Legislative Service Commission, Fiscal Note and Local Impact Statement, as introduced, at https://www.legislature.ohio.gov/download?key=11626&format=pdf
 A qualified pregnancy resource center offers services to assist “pregnant women in carrying their pregnancies to term.” Legislative text as introduced at https://www.legislature.ohio.gov/legislation/legislation-documents?id=GA133-HB-297
 Makela, Eric, Ohio Legislative Service Commission, Fiscal Note and Local Impact Statement, In House Ways and Means, at https://www.legislature.ohio.gov/download?key=11345&format=pdf
 Cummins, Philip A., Ohio Legislative Service Commission, Fiscal Note & Local Impact Statement, SB 95, As Passed by the Senate, at https://www.legislature.ohio.gov/download?key=11567&format=pdf
 Joe McDaniels, Ohio Legislative Service Commission, Bill Analysis, HB 162 as referred by house rules and reference, at https://www.legislature.ohio.gov/download?key=12291&format=pdf
 Patton, Wendy, “Testimony: Movie Tax Credit bill raises questions,” Testimony to the House Finance Committee, May 17, 2019 at https://bit.ly/2TMAMqm
 Patton, Wendy, Testimony on Senate Bill 8 before the Senate Ways and Means Committee, March 5, 2019 at https://bit.ly/2ZhwwAN
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