Regards certain water and sewer practices of municipalities

As Introduced

136th
General Assembly

Regular
Session
S. B. No. 376

2025-2026

Senator Cutrona

To
amend sections 5747.50, 5747.502, 5747.51, and 5747.53 and to enact
sections 9.662, 743.80, 5747.504, and 5747.505 of the Revised Code
to
create a process for withholding local government funds and state
water and sewer assistance from municipal corporations that engage in
certain water and sewer practices with respect to extraterritorial
service.

BE
IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section
1.
That
sections 5747.50, 5747.502, 5747.51, and 5747.53 be amended and
sections 9.662, 743.80, 5747.504, and 5747.505 of the Revised Code be
enacted to read as follows:

Sec.
9.662.
Upon
receiving the copy of a declaratory judgment forwarded by the tax
commissioner under division (B) of section 5747.504 of the Revised
Code, the director of environmental protection, the director of the
Ohio public works commission, the Ohio water development authority,
and the director of development shall not award any loan, grant, or
other form of financial assistance to the noncompliant municipal
corporation identified in the certification for the purpose of
improving that municipal corporation's water or sewerage system,
except for awards of federal funds required by federal law or
guidelines to be awarded to the municipal corporation for that
purpose.

Upon
receiving the copy of a declaratory judgment forwarded by the tax
commissioner under division (C)(1) of section 5747.504 of the Revised
Code, the director of environmental protection, the director of the
Ohio public works commission, the Ohio water development authority,
and the director of development shall cease enforcing this
prohibition against that municipal corporation.

Sec.
743.80.
(A)
As used in this section, "customer class" means ratepayers
for property that is of the same use or nature, such as residential
property or commercial property.

(B)
Except as provided under division (G) of this section, a township or
municipal corporation may file an action for declaratory judgment as
provided in Chapter 2721. of the Revised Code to declare as a
noncompliant municipal corporation a municipal corporation that
provides water or sewer service to property located in that township
or municipal corporation and to declare the township or municipal
corporation filing the action, or any township or municipal
corporation made a party to the action under this division, as an
affected subdivision. The action shall be filed in the court of
common pleas in any county that includes territory of the alleged
noncompliant municipal corporation. The alleged noncompliant
municipal corporation shall be made the defendant in the action. Upon
the filing of such an action, each other township or municipal
corporation with property that is provided water or sewer service
from the defendant municipal corporation shall be served with a copy
of the complaint and, upon filing a request with the court, shall be
made a party to the action.

(C)
The court shall issue a declaratory judgment declaring the defendant
municipal corporation to be a noncompliant municipal corporation if
the court determines that any other subdivision that is a party to
the action establishes, by a preponderance of the evidence, that the
defendant municipal corporation engages in either of the following
practices:

(1)
Charging a customer class for property located in the other
subdivision higher rates for water or sewer services than for the
same customer class for property located in the defendant municipal
corporation, unless the defendant municipal corporation establishes,
by a preponderance of the evidence, either of the following:

(a)
Those higher rates are calculated pursuant to generally accepted
industry practices consistent with the methodology in industry
guidance applicable to municipal-owned sewer and water systems.

(b)
Both (i) the higher rates for property located in the other
subdivision do not exceed one hundred twenty-five per cent of the
rates for the same customer class for property located in the
defendant municipal corporation and (ii) the defendant municipal
corporation, on the effective date of this section, provided water or
sewer service to the property and charged that property not more than
one hundred twenty-five per cent of the rates for the same customer
class for property located in the defendant municipal corporation on
that date.

(2)
Requiring, as a condition of providing water or sewer services to
property located within the subdivision, that the subdivision provide
direct payments to the defendant municipal corporation, unless the
defendant municipal corporation establishes, by a preponderance of
the evidence, that those direct payments are reasonably related to
the cost of providing water or sewer services to property within the
territory of that subdivision.

(D)
If the court issues a declaratory judgment declaring a municipal
corporation to be a noncompliant municipal corporation, the court
shall also declare in that declaratory judgment which of the
townships or municipal corporations that are a party to the action
qualify as an affected subdivision. The court shall declare a
township or municipal corporation to be an affected subdivision if
the court finds that the township or municipal corporation is either
required to make a direct payment described in division (C)(2) of
this section or has property within its territory, the ratepayer for
which is subject to the higher rates described in division (C)(1) of
this section. Any party to the action that is not a prevailing party
may appeal the action.

(E)
Not later than one hundred eighty days after the date the time to
appeal the declaratory judgment described in division (C) of this
section has elapsed, any township or municipal corporation declared
to be an affected subdivision in that declaratory judgment may
certify a copy of the declaratory judgment to the tax commissioner,
who shall proceed as provided in section 5747.504 of the Revised
Code.

(F)
A municipal corporation that a court has declared in a declaratory
judgment issued under division (C) of this section to be a
noncompliant municipal corporation may file an action for declaratory
judgment as provided in Chapter 2721. of the Revised Code to declare
that the municipal corporation no longer qualifies as a noncompliant
municipal corporation in the same court of common pleas that issued
the declaratory judgment described in division (C) of this section.
Upon the filing of such an action, each township or municipal
corporation declared by the court under division (D) of this section
to be an affected subdivision shall be made a defendant to the
action.

The
court shall issue a declaratory judgment declaring that the
noncompliant municipal corporation no longer qualifies as a
noncompliant municipal corporation if the municipal corporation
establishes, by a preponderance of the evidence, that the municipal
corporation does not engage in either of the practices described in
divisions (C)(1) and (2) of this section in relation to each affected
subdivision.

Any
party to the action that is not a prevailing party may appeal the
action. A declaratory judgment issued by a court under division (F)
of this section shall supersede any prior declaratory judgment issued
under division (C) of this section with respect to the noncompliant
municipal corporation. If a court issues a declaratory judgment
declaring that the municipal corporation no longer qualifies as a
noncompliant municipal corporation, not later than one hundred eighty
days after the date the time to appeal the declaratory judgment
described in division (F) of this section has elapsed, the municipal
corporation that filed the action may certify the declaratory
judgment to the tax commissioner, who shall proceed as provided in
section 5747.504 of the Revised Code.

(G)
No action for declaratory judgment may be filed under division (B) of
this section on the basis of either of the following:

(1)
Water or sewer rates established or prescribed pursuant to a contract
in effect on the effective date of this section between a municipal
corporation supplying water or sewer service and a county, township,
or another municipal corporation within which is located property
served by water or sewer service from that supplying municipal
corporation;

(2)
Any direct payment required from a township or municipal corporation
to another municipal corporation as a condition of the other
municipal corporation supplying water or sewer service to property
located in that subdivision pursuant to a contract in effect on the
effective date of this section.

Sec.
5747.50.
(A)
As used in this section:

(1)
"County's proportionate share of the calendar year 2007 LGF and
LGRAF distributions" means the percentage computed for the
county under division (B)(1)(a) of section 5747.501 of the Revised
Code.

(2)
"County's proportionate share of the total amount of the local
government fund additional revenue formula" means each county's
proportionate share of the state's population as determined for and
certified to the county for distributions to be made during the
current calendar year under division (B)(2)(a) of section 5747.501 of
the Revised Code. If prior to the first day of January of the current
calendar year the federal government has issued a revision to the
population figures reflected in the estimate produced pursuant to
division (B)(2)(a) of section 5747.501 of the Revised Code, such
revised population figures shall be used for making the distributions
during the current calendar year.

(3)
"2007 LGF and LGRAF county distribution base available in that
month" means the lesser of the amounts described in division
(A)(3)(a) and (b) of this section, provided that the amount shall not
be less than zero:

(a)
The total amount available for distribution to counties from the
local government fund during the current month.

(b)
The total amount distributed to counties from the local government
fund and the local government revenue assistance fund to counties in
calendar year 2007 less the total amount distributed to counties
under division (B)(1) of this section during previous months of the
current calendar year.

(4)
"Local government fund additional revenue distribution base
available during that month" means the total amount available
for distribution to counties during the month from the local
government fund, less any amounts to be distributed in that month
from the local government fund under division (B)(1) of this section,
provided that the local government fund additional revenue
distribution base available during that month shall not be less than
zero.

(5)
"Total amount available for distribution to counties" means
the total amount available for distribution from the local government
fund during the current month less the total amount available for
distribution to municipal corporations during the current month under
division (C) of this section.

(B)
On or before the tenth day of each month, the tax commissioner shall
provide for payment to each county an amount equal to the sum of:

(1)
The county's proportionate share of the calendar year 2007 LGF and
LGRAF distributions multiplied by the 2007 LGF and LGRAF county
distribution base available in that month, provided that if the 2007
LGF and LGRAF county distribution base available in that month is
zero, no payment shall be made under division (B)(1) of this section
for the month or the remainder of the calendar year; and

(2)
The county's proportionate share of the total amount of the local
government fund additional revenue formula multiplied by the local
government fund additional revenue distribution base available during
that month.

Money
received into the treasury of a county under this division shall be
credited to the undivided local government fund in the treasury of
the county on or before the fifteenth day of each month. On or before
the twentieth day of each month, the county auditor shall issue
warrants against all of the undivided local government fund in the
county treasury in the respective amounts allowed as provided in
section 5747.51 of the Revised Code, and the treasurer shall
distribute and pay such sums to the subdivision therein.

(C)(1)
As used in division (C) of this section:

(a)
"Total amount available for distribution to municipalities
during the current month" means the difference obtained by
subtracting one million dollars from the product obtained by
multiplying the total amount available for distribution from the
local government fund during the current month by the aggregate
municipal share.

(b)
"Aggregate municipal share" means the quotient obtained by
dividing the total amount distributed directly from the local
government fund to municipal corporations during calendar year 2007
by the total distributions from the local government fund and local
government revenue assistance fund during calendar year 2007.

(c)
A municipal corporation's "distribution share" equals one
of the following:

(i)
For municipal corporations with a population of more than fifty
thousand, fifty thousand;

(ii)
For municipal corporations with a population of less than one
thousand, zero;

(iii)
For all other municipal corporations, the municipal corporation's
population.

(d)
A municipal corporation's "distribution percentage" equals
the percentage that a municipal corporation's distribution share is
of the total of all municipal corporations' distribution shares.

(2)
On or before the tenth day of each month, the tax commissioner shall
provide for payment from the local government fund to each municipal
corporation an amount equal to the product derived by multiplying the
municipal corporation's distribution percentage by the total amount
available for distribution to municipal corporations during the
current month.

(3)
Payments received by a municipal corporation under this division
shall be paid into its general fund and may be used for any lawful
purpose.

(4)
The amount distributed to municipal corporations under this division
during any calendar year shall not exceed the amount distributed
directly from the local government fund to municipal corporations
during calendar year 2007. If that maximum amount is reached during
any month, distributions to municipal corporations in that month
shall be as provided in divisions (C)(1) and (2) of this section, but
no further distributions shall be made to municipal corporations
under division (C) of this section during the remainder of the
calendar year.

(5)
Upon being informed of a municipal corporation's dissolution, the tax
commissioner shall cease providing for payments to that municipal
corporation under division (C) of this section. The proportionate
shares of the total amount available for distribution to each of the
remaining municipal corporations under this division shall be
increased on a pro rata basis.

The
tax commissioner shall reduce
or
cease
payments
under division (C) of this section to municipal corporations for
which
reduced

a
reduction or cessation of
payments

are

is

required
under section 5747.502
or
5747.504
of
the Revised Code.

(D)
Each municipal corporation which has in effect a tax imposed under
Chapter 718. of the Revised Code shall, no later than the
thirty-first day of August of each year, certify to the tax
commissioner, on a form prescribed by the commissioner, the amount of
income tax revenue collected and refunded by such municipal
corporation pursuant to such chapter during the preceding calendar
year, arranged, when possible, by the type of income from which the
revenue was collected or the refund was issued. The municipal
corporation shall also report the amount of income tax revenue
collected and refunded on behalf of a joint economic development
district or a joint economic development zone that levies an income
tax administered by the municipal corporation and the amount of such
revenue distributed to contracting parties during the preceding
calendar year. The tax commissioner may withhold payment of local
government fund moneys pursuant to division (C) of this section from
any municipal corporation for failure to comply with this reporting
requirement.

(E)(1)
For the purposes of division (E) of this section:

(a)
"Eligible taxing district" means a township, township fire
district, or joint fire district for which the total taxable value of
eligible power plants for tax year 2017 is at least thirty per cent
less than the total taxable value of eligible power plants for tax
year 2016.

(b)
"Eligible power plant" means a power plant that is subject
to the requirements of 10 C.F.R. part 73.

(c)
"Total taxable value of eligible power plants" of an
eligible taxing district means the total taxable value of the taxable
property of eligible power plants apportioned to the district as
shown in a preliminary assessment or amended preliminary assessment
and listed on the tax list of real and public utility property.

(d)
"Taxable property" has the same meaning as in section
5727.01 of the Revised Code.

(e)
"Tax rate" of an eligible taxing district means one of the
following:

(i)
For townships, the sum of the rates of levies imposed under section
505.39, 505.51, or division (I), (J), (U), or (JJ) of section 5705.19
of the Revised Code and extended on the tax list of real and public
utility property for tax year 2017, excluding any levy imposed at
whatever rate is required to raise a fixed sum of money;

(ii)
For township fire districts and joint fire districts, the sum of the
rates of levies extended on the tax list of real and public utility
property for tax year 2017, excluding any levy imposed at whatever
rate is required to raise a fixed sum of money.

(2)
Each fiscal year from fiscal year 2018 through fiscal year 2028, the
tax commissioner shall compute the following amount for each eligible
taxing district:

(a)
For fiscal years 2018 and 2019, the amount obtained by multiplying
the eligible taxing district's tax rate by the difference obtained by
subtracting (i) the total taxable value of eligible power plants of
the district for tax year 2017 from (ii) the total taxable value of
eligible power plants of the district for tax year 2016;

(b)
For fiscal years 2020 through 2028, ninety per cent of the amount
calculated for the district under division (E)(2)(a) or (b) of this
section for the preceding fiscal year.

The
commissioner shall certify the sum of the amounts calculated for all
eligible taxing districts under this division for a fiscal year to
the director of budget and management who, on or before the seventh
day of each month of that fiscal year, shall transfer from the
general revenue fund to the local government fund one-twelfth of the
amount certified.

(3)
On or before the tenth day of each month, the tax commissioner shall
provide for payment to each county treasury in which an eligible
taxing district is located an amount equal to one-twelfth of the
amount computed for the district for that fiscal year under division
(E)(2) of this section.

Money
received into the treasury of a county under division (E) of this
section shall be credited to the undivided local government fund in
the treasury of the county on or before the fifteenth day of each
month. On or before the twentieth day of each month, the county
auditor shall issue warrants against the undivided local government
fund for the amounts attributable to each eligible taxing district,
and the treasurer shall distribute and pay such amounts to each
eligible taxing district. Money received by a township fire district
or joint fire district under this division shall be credited to the
district's general fund and may be used for any lawful purpose of the
district. Money received by a township under this division shall be
credited to the township's general fund and shall be used for the
purpose of funding fire, police, emergency medical, or ambulance
services.

Sec.
5747.502.
(A)
As used in this section:

(1)
"Traffic law photo-monitoring device" has the same meaning
as in section 4511.092 of the Revised Code.

(2)
"School zone" has the same meaning as in section 4511.21 of
the Revised Code.

(3)
"Transportation district" means a territorial district
established by the director of transportation under section 5501.14
of the Revised Code.

(4)
"District deputy director" means the person appointed and
assigned by the director of transportation under section 5501.14 of
the Revised Code to administer the activities of a transportation
district.

(5)
"Gross amount" means the entire amount of traffic camera
fines and fees paid by a driver.

(6)
"Local government fund adjustment" or "LGF adjustment"
means the sum of:

(a)
The gross amount of all traffic camera fines collected by a local
authority during the preceding fiscal year, as reported under
division (B)(1) of this section, if such a report is required; plus

(b)
The residual adjustment computed for the local authority under
division (B)(4) of this section, if such an adjustment applies.

(7)
"Local government fund payments" or "LGF payments"
means the payments a local authority would receive under sections
5747.503, 5747.51, and 5747.53, and division (C) of section 5747.50
of the Revised Code, as applicable, if not for the reductions
required by divisions (C) and (D) of this section.

(8)
"Residual adjustment" means the most recent LGF adjustment
computed for a local authority under division (B)(2) or (3) of this
section minus the sum of the reductions applied after that
computation under division (C) of this section to the local
authority's LGF payments.

(9)
"Traffic camera fines" means civil fines for any violation
of any local ordinance or resolution that are based upon evidence
recorded by a traffic law photo-monitoring device.

(10)
"Qualifying village" has the same meaning as in section
5747.503 of the Revised Code.

(11)
"Local authority" means a municipal corporation, county, or
township.

(B)(1)
Annually, on or before the thirty-first day of July, any local
authority that directly or indirectly collected traffic camera fines
during the preceding fiscal year shall file a report with the tax
commissioner that includes a detailed statement of the gross amount
of all traffic camera fines the local authority collected during that
period and the gross amount of such fines that the local authority
collected for violations that occurred within a school zone.

(2)
Annually, on or before the tenth day of August, and except as
otherwise provided in this division, the commissioner shall compute a
local government fund adjustment for each local authority that files
a report under division (B)(1) of this section or with respect to
which a residual adjustment applies. Subject to division (B)(3) of
this section

and section 5747.505 of the Revised Code
,
the LGF adjustment shall be used by the commissioner to determine the
amount of the reductions required under division (C) of this section
for each of the next twelve months, starting with the month in which
the LGF adjustment is computed. After those twelve months, the LGF
adjustment ceases to apply and, if an LGF adjustment continues to be
required, the amount of the reductions required under division (C) of
this section shall be determined based on an updated LGF adjustment
computed under this division.

After

the
effective date of this amendment
September
30, 2025
,
no LGF adjustment shall be calculated for a county or township
prohibited from operating a traffic law photo-monitoring device by
section 4511.093 of the Revised Code. An LGF adjustment that applies
to a county or township on
the
effective date of this amendment
September
30, 2025,
ceases
to apply as of that date.

(3)
Upon receipt of a report described by division (B)(1) of this section
that is not timely filed, the commissioner shall do both of the
following:

(a)
If one or more payments to the local authority has been withheld
under division (D) of this section because of the local authority's
failure to file the report, notify the county auditor and county
treasurer of the appropriate county that the report has been received
and that, subject to division (C) of this section, payments to the
local authority from the undivided local government fund are to
resume.

(b)
Compute the local authority's LGF adjustment using the information in
the report. An LGF adjustment computed under this division shall be
used by the commissioner to determine the amount of the reductions
required under division (C) of this section starting with the next
required reduction. The LGF adjustment ceases to apply on the
thirty-first day of the ensuing July, following which, if an LGF
adjustment continues to be required, the amount of the reductions
required under division (C) of this section shall be determined based
on an updated LGF adjustment computed under division (B)(2) of this
section.

(4)
Annually, on or before the tenth day of August, the commissioner
shall compute a residual adjustment for each local authority whose
LGF adjustment for the preceding year exceeds the amount by which the
local authority's LGF payments were reduced during that year under
division (C) of this section. The residual adjustment shall be used
to compute the LGF adjustment for the ensuing year under division
(B)(2) of this section.

(C)

The

Subject
to section 5747.505 of the Revised Code, the
commissioner
shall do the following, as applicable, respecting any local authority
to which an LGF adjustment computed under division (B) of this
section applies:

(1)
If the local authority is a municipal corporation with a population
of one thousand or more, reduce payments to the municipal corporation
under division (C) of section 5747.50 of the Revised Code by
one-twelfth of the LGF adjustment. If one-twelfth of the LGF
adjustment exceeds the amount of money the municipal corporation
would otherwise receive under division (C) of section 5747.50 of the
Revised Code, the commissioner also shall reduce payments to the
appropriate county undivided local government fund under division (B)
of section 5747.50 of the Revised Code by an amount equal to the
lesser of (a) one-twelfth of the excess, or (b) the amount of the
payment the municipal corporation would otherwise receive from the
fund under section 5747.51 or 5747.53 of the Revised Code.

(2)
If the local authority is a township or qualifying village, reduce
the supplemental payments to the appropriate county undivided local
government fund under section 5747.503 of the Revised Code by the
lesser of one-twelfth of the LGF adjustment, or the amount of money
the township or qualifying village would otherwise receive under that
section. If one-twelfth of the LGF adjustment exceeds the amount of
money the township or qualifying village would otherwise receive
under section 5747.503 of the Revised Code, the commissioner also
shall reduce payments to the appropriate county undivided local
government fund under division (B) of section 5747.50 of the Revised
Code by an amount equal to the lesser of (a) one-twelfth of the
excess, or (b) the amount of the payment the township or qualifying
village would otherwise receive from the fund under section 5747.51
or 5747.53 of the Revised Code.

(3)
If the local authority is a county, reduce payments to the
appropriate county undivided local government fund under division (B)
of section 5747.50 of the Revised Code by an amount equal to the
lesser of (a) one-twelfth of the LGF adjustment, or (b) the amount of
the payment the county would otherwise receive from the fund under
section 5747.51 or 5747.53 of the Revised Code.

(4)
For any local authority, on or before the tenth day of each month a
reduction is made under division (C)(1), (2), or (3) of this section,
make a payment to the local authority in an amount equal to the
lesser of (a) one-twelfth of the gross amount of traffic camera fines
the local authority collected in the preceding fiscal year for
violations that occurred within a school zone, as indicated on the
report filed by the local authority pursuant to division (B)(1) of
this section, or (b) the amount by which the local authority's LGF
payments were reduced that month pursuant to division (C)(1), (2), or
(3) of this section. Payments received by a local authority under
this division shall be used by the local authority for school safety
purposes.

(D)

Upon

Subject
to section 5747.505 of the Revised Code, upon
discovery,
based on information in the commissioner's possession, that a local
authority required to file a report under division (B)(1) of this
section has failed to do so, the commissioner shall do the following,
as applicable:

(1)
If the local authority is a municipal corporation with a population
of one thousand or more, cease providing for payments to the
municipal corporation under section 5747.50 of the Revised Code
beginning with the next required payment and until such time as the
report is received by the commissioner;

(2)
If the local authority is a township or qualifying village, reduce
the supplemental payments to the appropriate county undivided local
government fund under section 5747.503 of the Revised Code by an
amount equal to the amount of such payments the local authority would
otherwise receive under that section, beginning with the next
required payment and until such time as the report is received by the
commissioner;

(3)
For any local authority, reduce payments to the appropriate county
undivided local government fund under division (B) of section 5747.50
of the Revised Code by an amount equal to the amount of such payments
the local authority would otherwise receive under section 5747.51 or
5747.53 of the Revised Code, beginning with the next required payment
and until such time as the report is received by the commissioner;

(4)
For any local authority, notify the county auditor and county
treasurer that such payments are to cease until the commissioner
notifies the auditor and treasurer under division (E) of this section
that the payments are to resume.

(E)
The commissioner shall notify the county auditor and county treasurer
on or before the day the commissioner first reduces a county
undivided local government fund payment to that county under division
(C) of this section. The notice shall include the full amount of the
reduction, a list of the local authorities to which the reduction
applies, and the amount of reduction attributed to each such local
authority. The commissioner shall send an updated notice to the
county auditor and county treasurer any time the amount the reduction
attributed to any local authority changes.

A
county treasurer that receives a notice from the commissioner under
this division or division (B)(3)(a) or (D)(4) of this section shall
reduce, cease, or resume payments from the undivided local government
fund to the local authority that is the subject of the notice as
specified by the commissioner in the notice. Unless otherwise
specified in the notice, the payments shall be reduced, ceased, or
resumed beginning with the next required payment.

(F)(1)
There is hereby created in the state treasury the Ohio highway and
transportation safety fund. On or before the tenth day of each month,
the commissioner shall deposit in the fund an amount equal to the
total amount by which payments to local authorities were reduced or
ceased under division (C) or (D) of this section minus the total
amount of payments made under division (C)(4) of this section. Except
as provided in division (F)(2) of this section, the amount deposited
with respect to a local authority shall be credited to an account to
be created in the fund for the transportation district in which that
local authority is located. If the local authority is located within
more than one transportation district, the amount credited to the
account of each such transportation district shall be prorated on the
basis of the number of centerline miles of public roads and highways
in both the local authority and the respective districts. Amounts
credited to a transportation district's account shall be used by the
department of transportation and the district deputy director
exclusively to enhance public safety on public roads and highways
within that transportation district.

(2)
Notwithstanding division (F)(1) of this section, in fiscal year 2026,
six million dollars of the amount in the Ohio highway and
transportation safety fund, including any account thereof, shall be
used for rail development infrastructure projects pursuant to an
appropriation made by the general assembly. The amounts credited to
each account of a transportation district pursuant to division (F)(1)
of this section shall be reduced in the same proportion that the
amount deposited in each account is of the total fund balance.

Sec.
5747.504.
(A)
As used in this section:

(1)
"Noncompliant municipal corporation" means a municipal
corporation that has been declared to be a noncompliant municipal
corporation in a declaratory judgment certified to the tax
commissioner under division (E) of section 743.80 of the Revised
Code.

(2)
"Affected subdivision" means a municipal corporation or
township that has been declared to be an affected subdivision in a
declaratory judgment certified to the tax commissioner under division
(E) of section 743.80 of the Revised Code.

(B)
Upon receiving a certification of a declaratory judgment under
division (E) of section 743.80 of the Revised Code, the tax
commissioner shall do all of the following:

(1)
Immediately forward a copy of the declaratory judgment to the
director of environmental protection, the director of the Ohio public
works commission, the Ohio water development authority, and the
director of development;

(2)
Cease providing for payments to the noncompliant municipal
corporation under division (C) of section 5747.50 of the Revised
Code, beginning with the next required payment, and reduce payments
to the appropriate county undivided local government fund under
division (B) of section 5747.50 of the Revised Code by an amount
equal to the payments the municipal corporation would otherwise
receive under section 5747.503, 5747.51, or 5747.53 of the Revised
Code, in both cases beginning with the next required payment;

(3)
Immediately notify the county auditor and county treasurer that
payments to the noncompliant municipal corporation from the county
undivided local government fund are to cease until the tax
commissioner notifies the auditor and treasurer under division (C)(3)
of this section that the payments are to resume.

The
county treasurer shall cease providing for payments to the municipal
corporation from the undivided local government fund beginning with
the payment specified by the tax commissioner.

(C)
Upon receiving a certification of a declaratory judgment under
division (F) of section 743.80 of the Revised Code, the tax
commissioner shall do all of the following:

(1)
Immediately forward a copy of the declaratory judgment to the
director of environmental protection, the director of the Ohio public
works commission, the Ohio water development authority, and the
director of development;

(2)
Resume payments to the formerly noncompliant municipal corporation
under division (C) of section 5747.50 of the Revised Code and resume
payments to the county's undivided local government fund to the
extent such payments were reduced under division (B)(2) of this
section, in both cases beginning with the next required payment;

(3)
Immediately notify the county auditor and county treasurer that the
treasurer is to resume payments from the undivided local government
fund to the formerly noncompliant municipal corporation under section
5747.503, 5747.51, or 5747.53 of the Revised Code.

The
county treasurer shall resume payments to the municipal corporation
from the undivided local government fund beginning with the payment
specified by the tax commissioner.

(D)
The tax commissioner shall provide for payment of an amount equal to
amounts withheld from a noncompliant municipal corporation under
division (B)(2) of this section to each township and municipal
corporation that is an affected subdivision with respect to the
noncompliant municipal corporation. The payment to each such
subdivision shall be in the proportion that the population of that
subdivision bears to the total population of all affected
subdivisions.

(E)
An affected subdivision shall use money received under division (D)
of this section for the current operating expenses of the
subdivision.

Sec.
5747.505.
As
used in this section, "affected subdivision" has the same
meaning as in section 5747.504 of the Revised Code.

If
a municipal corporation is subject to more than one reduction
required by sections 5747.502 and 5747.504 of the Revised Code for
the same month, the tax commissioner shall proceed in the following
order, to the extent the reductions do not exceed the amount of local
government fund payments the municipal corporation would otherwise
receive:

(A)
Apply any reduction required under division (B)(2) of section
5747.504 of the Revised Code and transfer the amount of payments
withheld to each affected subdivision under division (D) of that
section;

(B)
Apply any reduction required under division (D) of section 5747.502
of the Revised Code and deposit the amount of payments withheld to
appropriate account of the Ohio highway and transportation safety
fund under division (F) of that section;

(C)
Apply any reduction required under division (C) of section 5747.502
of the Revised Code and deposit the amount of payments withheld to
the municipal corporation, as required by division (C)(4) of section
5747.502 of the Revised Code, and to the appropriate account of the
Ohio highway and transportation safety fund under division (F) of
that section.

Sec.
5747.51.
(A)
On or before the twenty-fifth day of July of each year, the tax
commissioner shall make and certify to the county auditor of each
county an estimate of the amount of the local government fund to be
allocated to the undivided local government fund of each county for
the ensuing calendar year, adjusting the total as required to account
for subdivisions
receiving

required
to receive a reduction or cessation of
local
government funds under section 5747.502
or
5747.504
of
the Revised Code.

(B)
At each annual regular session of the county budget commission
convened pursuant to section 5705.27 of the Revised Code, each
auditor shall present to the commission the certificate of the
commissioner, the annual tax budget and estimates, and the records
showing the action of the commission in its last preceding regular
session. The commission, after extending to the representatives of
each subdivision an opportunity to be heard, under oath administered
by any member of the commission, and considering all the facts and
information presented to it by the auditor, shall determine the
amount of the undivided local government fund needed by and to be
apportioned to each subdivision for current operating expenses, as
shown in the tax budget of the subdivision. This determination shall
be made pursuant to divisions (C) to (I) of this section, unless the
commission has provided for a formula pursuant to section 5747.53 of
the Revised Code. The commissioner shall reduce the amount of funds
from the undivided local government fund to a subdivision required to
receive
reduced

a
reduction or cessation of
funds
under section 5747.502
or
5747.504
of
the Revised Code.

Nothing
in this section prevents the budget commission, for the purpose of
apportioning the undivided local government fund, from inquiring into
the claimed needs of any subdivision as stated in its tax budget, or
from adjusting claimed needs to reflect actual needs. For the
purposes of this section, "current operating expenses"
means the lawful expenditures of a subdivision, except those for
permanent improvements and except payments for interest, sinking
fund, and retirement of bonds, notes, and certificates of
indebtedness of the subdivision.

(C)
The commission shall determine the combined total of the estimated
expenditures, including transfers, from the general fund and any
special funds other than special funds established for road and
bridge; street construction, maintenance, and repair; state highway
improvement; and gas, water, sewer, and electric public utilities
operated by a subdivision, as shown in the subdivision's tax budget
for the ensuing calendar year.

(D)
From the combined total of expenditures calculated pursuant to
division (C) of this section, the commission shall deduct the
following expenditures, if included in these funds in the tax budget:

(1)
Expenditures for permanent improvements as defined in division (E) of
section 5705.01 of the Revised Code;

(2)
In the case of counties and townships, transfers to the road and
bridge fund, and in the case of municipalities, transfers to the
street construction, maintenance, and repair fund and the state
highway improvement fund;

(3)
Expenditures for the payment of debt charges;

(4)
Expenditures for the payment of judgments.

(E)
In addition to the deductions made pursuant to division (D) of this
section, revenues accruing to the general fund and any special fund
considered under division (C) of this section from the following
sources shall be deducted from the combined total of expenditures
calculated pursuant to division (C) of this section:

(1)
Taxes levied within the ten-mill limitation, as defined in section
5705.02 of the Revised Code;

(2)
The budget commission allocation of estimated county public library
fund revenues to be distributed pursuant to section 5747.48 of the
Revised Code;

(3)
Estimated unencumbered balances as shown on the tax budget as of the
thirty-first day of December of the current year in the general fund,
but not any estimated balance in any special fund considered in
division (C) of this section;

(4)
Revenue, including transfers, shown in the general fund and any
special funds other than special funds established for road and
bridge; street construction, maintenance, and repair; state highway
improvement; and gas, water, sewer, and electric public utilities,
from all other sources except those that a subdivision receives from
an additional tax or service charge voted by its electorate or
receives from special assessment or revenue bond collection. For the
purposes of this division, where the charter of a municipal
corporation prohibits the levy of an income tax, an income tax levied
by the legislative authority of such municipal corporation pursuant
to an amendment of the charter of that municipal corporation to
authorize such a levy represents an additional tax voted by the
electorate of that municipal corporation. For the purposes of this
division, any measure adopted by a board of county commissioners
pursuant to section 322.02, 4504.02, or 5739.021 of the Revised Code,
including those measures upheld by the electorate in a referendum
conducted pursuant to section 322.021, 4504.021, or 5739.022 of the
Revised Code, shall not be considered an additional tax voted by the
electorate.

Money
in a reserve balance account established by a county, township, or
municipal corporation under section 5705.13 of the Revised Code shall
not be considered an unencumbered balance or revenue under division
(E)(3) or (4) of this section. Money in a reserve balance account
established by a township under section 5705.132 of the Revised Code
shall not be considered an unencumbered balance or revenue under
division (E)(3) or (4) of this section.

If
a county, township, or municipal corporation has created and
maintains a nonexpendable trust fund under section 5705.131 of the
Revised Code, the principal of the fund, and any additions to the
principal arising from sources other than the reinvestment of
investment earnings arising from such a fund, shall not be considered
an unencumbered balance or revenue under division (E)(3) or (4) of
this section. Only investment earnings arising from investment of the
principal or investment of such additions to principal may be
considered an unencumbered balance or revenue under those divisions.

(F)
The total expenditures calculated pursuant to division (C) of this
section, less the deductions authorized in divisions (D) and (E) of
this section, shall be known as the "relative need" of the
subdivision, for the purposes of this section.

(G)
The budget commission shall total the relative need of all
participating subdivisions in the county, and shall compute a
relative need factor by dividing the total estimate of the undivided
local government fund by the total relative need of all participating
subdivisions.

(H)
The relative need of each subdivision shall be multiplied by the
relative need factor to determine the proportionate share of the
subdivision in the undivided local government fund of the county;
provided, that the maximum proportionate share of a county shall not
exceed the following maximum percentages of the total estimate of the
undivided local government fund governed by the relationship of the
percentage of the population of the county that resides within
municipal corporations within the county to the total population of
the county as reported in the reports on population in Ohio by the
department of development as of the twentieth day of July of the year
in which the tax budget is filed with the budget commission:

1

2

A

Percentage
of municipal population within the county:

Percentage
share of the county shall not exceed:

B

Less
than forty-one per cent

Sixty
per cent

C

Forty-one
per cent or more but less than eighty-one per cent

Fifty
per cent

D

Eighty-one
per cent or more

Thirty
per cent

Where
the proportionate share of the county exceeds the limitations
established in this division, the budget commission shall adjust the
proportionate shares determined pursuant to this division so that the
proportionate share of the county does not exceed these limitations,
and it shall increase the proportionate shares of all other
subdivisions on a pro rata basis. In counties having a population of
less than one hundred thousand, not less than ten per cent shall be
distributed to the townships therein.

(I)
The proportionate share of each subdivision in the undivided local
government fund determined pursuant to division (H) of this section
for any calendar year shall not be less than the product of the
average of the percentages of the undivided local government fund of
the county as apportioned to that subdivision for the calendar years
1968, 1969, and 1970, multiplied by the total amount of the undivided
local government fund of the county apportioned pursuant to former
section 5739.23 of the Revised Code for the calendar year 1970. For
the purposes of this division, the total apportioned amount for the
calendar year 1970 shall be the amount actually allocated to the
county in 1970 from the state collected intangible tax as levied by
section 5707.03 of the Revised Code and distributed pursuant to
section 5725.24 of the Revised Code, plus the amount received by the
county in the calendar year 1970 pursuant to division (B)(1) of
former section 5739.21 of the Revised Code, and distributed pursuant
to former section 5739.22 of the Revised Code. If the total amount of
the undivided local government fund for any calendar year is less
than the amount of the undivided local government fund apportioned
pursuant to former section 5739.23 of the Revised Code for the
calendar year 1970, the minimum amount guaranteed to each subdivision
for that calendar year pursuant to this division shall be reduced on
a basis proportionate to the amount by which the amount of the
undivided local government fund for that calendar year is less than
the amount of the undivided local government fund apportioned for the
calendar year 1970.

(J)
On the basis of such apportionment, the county auditor shall compute
the percentage share of each such subdivision in the undivided local
government fund and shall at the same time certify to the tax
commissioner the percentage share of the county as a subdivision. No
payment shall be made from the undivided local government fund,
except in accordance with such percentage shares.

Within
ten days after the budget commission has made its apportionment,
whether conducted pursuant to section 5747.51 or 5747.53 of the
Revised Code, the auditor shall publish a list of the subdivisions
and the amount each is to receive from the undivided local government
fund and the percentage share of each subdivision, in a newspaper or
newspapers of countywide circulation, and send a copy of such
allocation to the tax commissioner.

The
county auditor shall also send a copy of such allocation by ordinary
or electronic mail to the fiscal officer of each subdivision entitled
to participate in the allocation of the undivided local government
fund of the county. This copy shall constitute the official notice of
the commission action referred to in section 5705.37 of the Revised
Code.

All
money received into the treasury of a subdivision from the undivided
local government fund in a county treasury shall be paid into the
general fund and used for the current operating expenses of the
subdivision.

If
a municipal corporation maintains a municipal university, such
municipal university, when the board of trustees so requests the
legislative authority of the municipal corporation, shall participate
in the money apportioned to such municipal corporation from the total
local government fund, however created and constituted, in such
amount as requested by the board of trustees, provided such sum does
not exceed nine per cent of the total amount paid to the municipal
corporation.

If
any public official fails to maintain the records required by
sections 5747.50 to 5747.55 of the Revised Code or by the rules
issued by the tax commissioner, the auditor of state, or the
treasurer of state pursuant to such sections, or fails to comply with
any law relating to the enforcement of such sections, the local
government fund money allocated to the county may be withheld until
such time as the public official has complied with such sections or
such law or the rules issued pursuant thereto.

Sec.
5747.53.
(A)
As used in this section:

(1)
"City, located wholly or partially in the county, with the
greatest population" means the city, located wholly or partially
in the county, with the greatest population residing in the county;
however, if the county budget commission on or before January 1,
1998, adopted an alternative method of apportionment that was
approved by the legislative authority of the city, located partially
in the county, with the greatest population but not the greatest
population residing in the county, "city, located wholly or
partially in the county, with the greatest population" means the
city, located wholly or partially in the county, with the greatest
population whether residing in the county or not, if this alternative
meaning is adopted by action of the board of county commissioners and
a majority of the boards of township trustees and legislative
authorities of municipal corporations located wholly or partially in
the county.

(2)
"Participating political subdivision" means a municipal
corporation or township that satisfies all of the following:

(a)
It is located wholly or partially in the county.

(b)
It is not the city, located wholly or partially in the county, with
the greatest population.

(c)
Undivided local government fund moneys are apportioned to it under
the county's alternative method or formula of apportionment in the
current calendar year.

(B)
In lieu of the method of apportionment of the undivided local
government fund of the county provided by section 5747.51 of the
Revised Code, the county budget commission may provide for the
apportionment of the fund under an alternative method or on a formula
basis as authorized by this section. The commissioner shall reduce
the amount of funds from the undivided local government fund to a
subdivision required to receive
reduced

a
reduction or cessation of
funds
under section 5747.502
or
5747.504
of
the Revised Code.

Except
as otherwise provided in division (C) of this section, the
alternative method of apportionment shall have first been approved by
all of the following governmental units: the board of county
commissioners; the legislative authority of the city, located wholly
or partially in the county, with the greatest population; and a
majority of the boards of township trustees and legislative
authorities of municipal corporations, located wholly or partially in
the county, excluding the legislative authority of the city, located
wholly or partially in the county, with the greatest population. In
granting or denying approval for an alternative method of
apportionment, the board of county commissioners, boards of township
trustees, and legislative authorities of municipal corporations shall
act by motion. A motion to approve shall be passed upon a majority
vote of the members of a board of county commissioners, board of
township trustees, or legislative authority of a municipal
corporation, shall take effect immediately, and need not be
published.

Any
alternative method of apportionment adopted and approved under this
division shall be reviewed by the county budget commission at a
public hearing held at least once in the year following

the effective date of this amendment

October
3, 2023,
and
in every fifth year thereafter. The county budget commission shall
provide reasonable advance notice of the hearing to all political
subdivisions eligible to participate in the fund and shall take
public testimony from any such political subdivision that wishes to
testify.

Any
alternative method of apportionment adopted and approved under this
division may be revised, amended, or repealed in the same manner as
it may be adopted and approved. If an alternative method of
apportionment adopted and approved under this division is repealed,
the undivided local government fund of the county shall be
apportioned among the subdivisions eligible to participate in the
fund, commencing in the ensuing calendar year, under the
apportionment provided in section 5747.52 of the Revised Code, unless
the repeal occurs by operation of division (C) of this section or a
new method for apportionment of the fund is provided in the action of
repeal.

(C)
This division applies only in counties in which the city, located
wholly or partially in the county, with the greatest population has a
population of twenty thousand or less and a population that is less
than fifteen per cent of the total population of the county. In such
a county, the legislative authorities or boards of township trustees
of two or more participating political subdivisions, which together
have a population residing in the county that is a majority of the
total population of the county, each may adopt a resolution to
exclude the approval otherwise required of the legislative authority
of the city, located wholly or partially in the county, with the
greatest population. All of the resolutions to exclude that approval
shall be adopted not later than the first Monday of August of the
year preceding the calendar year in which distributions are to be
made under an alternative method of apportionment.

A
motion granting or denying approval of an alternative method of
apportionment under this division shall be adopted by a majority vote
of the members of the board of county commissioners and by a majority
vote of a majority of the boards of township trustees and legislative
authorities of the municipal corporations located wholly or partially
in the county, other than the city, located wholly or partially in
the county, with the greatest population, shall take effect
immediately, and need not be published. The alternative method of
apportionment under this division shall be adopted and approved
annually, not later than the first Monday of August of the year
preceding the calendar year in which distributions are to be made
under it. A motion granting approval of an alternative method of
apportionment under this division repeals any existing alternative
method of apportionment, effective with distributions to be made from
the fund in the ensuing calendar year. An alternative method of
apportionment under this division shall not be revised or amended
after the first Monday of August of the year preceding the calendar
year in which distributions are to be made under it.

(D)
In determining an alternative method of apportionment authorized by
this section, the county budget commission may include in the method
any factor considered to be appropriate and reliable, in the sole
discretion of the county budget commission.

(E)
The limitations set forth in section 5747.51 of the Revised Code,
stating the maximum amount that the county may receive from the
undivided local government fund and the minimum amount the townships
in counties having a population of less than one hundred thousand may
receive from the fund, are applicable to any alternative method of
apportionment authorized under this section.

(F)
On the basis of any alternative method of apportionment adopted and
approved as authorized by this section, as certified by the auditor
to the county treasurer, the county treasurer shall make distribution
of the money in the undivided local government fund to each
subdivision eligible to participate in the fund, and the auditor,
when the amount of those shares is in the custody of the treasurer in
the amounts so computed to be due the respective subdivisions, shall
at the same time certify to the tax commissioner the percentage share
of the county as a subdivision. All money received into the treasury
of a subdivision from the undivided local government fund in a county
treasury shall be paid into the general fund and used for the current
operating expenses of the subdivision. If a municipal corporation
maintains a municipal university, the university, when the board of
trustees so requests the legislative authority of the municipal
corporation, shall participate in the money apportioned to the
municipal corporation from the total local government fund, however
created and constituted, in the amount requested by the board of
trustees, provided that amount does not exceed nine per cent of the
total amount paid to the municipal corporation.

(G)
The actions of the county budget commission taken pursuant to this
section are final and may not be appealed to the board of tax
appeals, except on the issues of abuse of discretion and failure to
comply with the formula.

Section
2.
That
existing sections 5747.50, 5747.502, 5747.51, and 5747.53 of the
Revised Code are hereby repealed.

Section
3.
Section
5747.53 of the Revised Code is presented in this act as a composite
of the section as amended by H.B. 33 of the 135th General Assembly
and H.B. 62 of the 133rd General Assembly. The General Assembly,
applying the principle stated in division (B) of section 1.52 of the
Revised Code that amendments are to be harmonized if reasonably
capable of simultaneous operation, finds that the composite is the
resulting version of the section in effect prior to the effective
date of the section as presented in this act.