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Ohio House of Representatives passes state operating budget

Ohio House of Representatives passes state operating budget

May 2, 2023

By Andrew Huffman, Ohio REALTORS Director of Government Affairs

The Ohio House of Representatives passed HB 33, the main operating budget, during the last week in April. Before passing the multi-billion-dollar spending measure, the House made hundreds of changes to the plan, which was introduced earlier this year by Gov. Mike DeWine. One of the more high-profile changes made by the House includes the consolidation of the bottom two tax brackets (incomes between $26,050 and $92,150) and sets a new rate of 2.75 percent for that new bracket. Ohio REALTORS, which provided testimony before the House Finance Committee, was glad to see the House build upon many of the pro-housing provisions that Gov. DeWine included in his introduced-version of the budget measure.

One of the highest priorities for Ohio REALTORS in the main operating budget is the creation of the Homeownership Savings Linked Deposit Program. This program, which would be administered by the Ohio Treasurer’s Office, would be modeled after legislation we championed previously that created the first-time homebuyers savings account program. Under the plan proposed in the budget bill, Ohioans would be able to establish savings accounts that would offer above-market interest rates and allow Ohioans (family members and employers) who contribute to the accounts to deduct from their state income taxes up to $5,000 per year for single filers or $10,000 for couples filing jointly. The lifetime maximum deduction would be $25,000. The funding in the savings account would need to go towards down payments and closing costs of a home purchase. Unlike in previous bills, the program would be open to all Ohioans seeking to purchase a home, not just first-time homebuyers.

Other provisions of the budget supported by Ohio REALTORS include:

Right-To-List Home Sale Agreement: This provision added by the House is aimed at protecting homeowners from deceptive practices within the housing industry that locked homeowners into long-term right-to-list home sale agreements. The questionable practice that has surfaced within the industry provides homeowners cash in exchange for using a single company as their exclusive real estate broker for as long as 40 years. The exclusive right-to-list agreement is enforced even if the home goes into foreclosure or if the homeowner’s heirs inherit the property and try to sell the home. Violating the agreement can result in a lien being placed on the property. Multiple states, including the Ohio Attorney General, have filed lawsuits against this practice.

Property Tax Revision for Undeveloped Residential Property: The House of Representatives correctly revised Ohio’s tax law that unfairly penalizes homebuilders with higher taxes when they subdivide property for development. The current practice raises risks for homebuilders and can increase costs to the end buyer of the property, making home ownership more expensive. This change should encourage more housing development and help address the inventory shortage in the state.

State Housing Tax Credit: The House improved upon what was included in the Governor’s budget proposal by providing $500 million a year in tax credits for affordable housing development over the next six years. This program will be administered by the Ohio Housing Finance Agency (OHFA) and will support the development and rehabilitation of affordable multifamily housing. There have been 22 other states that have implemented similar state housing tax credit programs, which have led to additional investment in housing development. Affordable housing options have a positive impact not only on Ohio’s neighborhoods, but they provide an opportunity for a person to save for their next home, whether it is renting a market-rate apartment or saving for their first house.

Household Sewage Treatment Systems: Ohio REALTORS worked with members of the House to remove a provision in the as-introduced budget that would declare a household sewage treatment system (HSTS) a public health nuisance if it discharges to a dry well. This language would have resulted in thousands of households being forced to replace their HSTS. The cost to homeowners would be substantial. We encourage those homes with a dry well system to work with local boards of health on a remediation plan.

The House’s budget proposal also includes grants for local governments seeking to modernize zoning regulations for housing developments, additional funding for brownfield remediation, indexing of the homestead exemption to inflation, the elimination of local governments’ ability seek replacement levies, a study committee on property taxes in Ohio, and language that seeks to encourage electronic communication between licensees and the Division of Real Estate and Professional Licensing.

HB 33 now heads to the Senate for further debate. The final budget measure must be passed by both chambers and signed by Gov. DeWine by June 30. As HB 33 is deliberated, Ohio REALTORS will continue to advocate for the provisions highlighted above as well as for the protection of private property rights and the interests of our members.

While much of the focus has been on the main operating budget during the first four months of the legislative session, there have been over 250 bills introduced. CLICK HERE to view a complete list of legislation Ohio REALTORS is tracking.

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