March 25, 2026 · Ways And Means Committee · 3,369 words · 9 speakers · 54 segments
Hi everyone, I'd like to call this meeting of the House Ways and Means Committee to order. Robert, please call the roll.
Chairman Romer.
I'm here.
Vice Chair Thomas.
Here.
Ranking Member Troy.
Here.
Representatives Click.
It's checked in.
Daniels.
Here.
Demetrio.
Here.
Glassburn.
Lear.
Here.
Richardson.
Present.
Rogers.
Checked in.
Santucci.
Here.
Segrist.
Here.
Representative Thomas. And we have a quorum present. We'll proceed as a full committee. and members if you could check your iPads for minutes from the last meeting let me know if you have any changes, corrections, additions. Seeing none the minutes are accepted. Before we go in we've got four bills we're going to work on today. I do want to recognize one person who has done an excellent job of supporting this committee. Riley Alton who is the Democrats finance director, budget director is going to be leaving us in the next I think two weeks. He's done an excellent job. He provides a lot of good context. But he's also been very good to work with on the very difficult issues that we've handled in this committee. He's always done it on a very professional basis. And I really appreciate working with Riley. We recognized him, I think, about five months ago when he won his re-election. So this is the second time we're recognizing Riley. He's going to be moving on to MetroHealth to lobby for Cleveland MetroHealth. And he'll be back in his district in Cleveland on a full-time basis, rather than commuting back and forth to Columbus like we all do. So with that, I do want to recognize Riley. Excellent job. Representative Troy, would you like to make a quick comment or two?
Because I know he's done a great job of supporting you and your members. No, I echo your comments, Mr. Chairman. I think Riley has been invaluable in helping us sort through the complex issues that we have had to deal with this last term. And as you said, no committee meets more than ways and means. And so we've been fortunate to have Riley to help there. And I know where to find him over on the west side of Cleveland in case I still have some questions. And hopefully they won't conflict with his role with MetroHealth. But, Riley, we appreciate all your service here and the service you're going to give us over the next two weeks, maybe helping sort out the capital appropriations bill on our side. Thank you.
Thanks.
With that, yes. With that, we are going to move into House Bill 391 to require tax rates as a true value percentage on tax bills and ballots. We'll bring it forth for its third hearing, and before we hear any testimony, I'd like to recognize Representative Daniels for the purposes of a motion.
Hi. Thank you, Mr. Chair. I'd like to make a motion for Amendment 136-1963.
And that amendment's in order. If you could, Representative, just briefly explain the amendment.
Thank you. This amendment does two very basic things. Unfortunately, it took 200 pages to explain these two basic things, but it delays the implementation to elections held on or after January 1st of 2027. and then it removes one word. So it originally talked about the county auditor's market value and there are a few counties in the state of Ohio that do not have auditors. So we took the word auditor out and now it just says county market value. So 200 pages for that little piece.
Thank you for that explanation. Any questions on the amendment? I know it's very cursory. Seeing none, the amendment's accepted. This is marked for testimony, opposition testimony, but we have no testimony. Is there anybody here that wishes to testify in person? Seeing none, that will conclude the third hearing on House Bill 391. We're now going to move into House Bill 737, and I'm going to be testifying this, so I'm going to be turning the gavel over to our vice chair, and we're going to have Representative Hall and myself talking about counties.
Thank you, Chair. And while you're going to the dais, I do want to recognize we have a special guest from my county of Trumbull County, a high school senior, Nathan Lutz. Go ahead and stand up, Nathan. Nathan is a high school senior at LaBray, which is in Representative Santucci's district. And Nathan started the Turning Point Action Group at his high school and has been a strong leader for his community in LaBray. So thank you for shadowing me today and being here in Ways and Means Committee. And thank you so much for being here also. It was nice we had a chance to meet previously.
Vice Chair Thomas, Ranking Member Troy, and members of this esteemed committee. I use that word a lot. Thanks for the opportunity to present on House Bill 737. House Bill 737 addresses the serious and growing financial efficiency in Ohio's cash-based transactions. And I'll stress cash-based transactions. This bill establishes a uniform statewide cash rounding standard for payments made in Ohio by eliminating the need to use one cent coins, pennies, in transactions involving retail merchants as well as payments made to state and local and other governments. This legislation reflects a straightforward fiscal reality Pennies are going away we are not manufacturing any more pennies in the United States Robert did a little bit of research for me. We found out that it costs 3.7 cents to manufacture one penny. By eliminating pennies, the decision was made at the federal level. That's going to save the country about $56 million. But in recognition of the inefficiencies that might occur because of that, the Secretary of Treasury has determined that continued production should be discontinued. By standardizing cash-rounding practices, this legislation would reduce transactional inefficiencies, lower administrative burdens for merchants and government entities, and bring Ohio payment practices more in line with evolving federal currency policy, all while maintaining fairness and predictability for customers. I'm not going to have Rep. Hall explain what really is a very simple bill. Thank you, Mr. Chairman.
Representative Daniels, your 200-page amendment.
I have a two-page bill for you today, but a very important policy. As Vice Chair Thomas Regal, Member Troy, members of the House Ways and Means Committee, thank you for the opportunity to provide sponsor testimony before you today. I also want to thank my joint sponsor, Chairman Romer, for all of his work in this committee, but more importantly on this particular bill and outlining the problem that we are facing in our country and in our state in regards to the discontinuation of the pending. This particular piece of legislation is actually very simple. When you or any other citizen in the state of Ohio goes to pay in cash to the state, one of our agencies, or any political subdivision, the charge shall be rounded to the nearest nickel and full in this manner. Amounts ending in one and two would be rounded down to zero. Amounts ending in three or four will be rounded up to five. Amounts ending in a six or a seven will be rounded down to five, and amounts ending in an eight or nine will be rounded up to zero. There will also be no liability for merchants to accept cash payments and make these roundings in accordance with this piece of legislation. Several states have jumped into taking action, and this model legislation comes from many conversations from our House policy team after research done with NCSL, the Council on State Taxation or Cost, and lastly, some IPs, whom this will greatly have an impact on. This bill is a simple and straightforward piece of legislation which will improve our state's efficiency with transactions in a post-penny world. Thank you for the opportunity. Happy to take questions from members of this committee.
Thank you both for your testimony. Did not have to use the timer for you. Appreciate that. Are there any questions from the committee? Branking Member Troy.
Thank you, Mr. Chairman, Advice Chairman. Just a quick question. So obviously one of the reasons we got rid of the Articles of Confederation was because all the colonies had their own currency systems, and so we just have a net. Does this pass muster with the federal government that we're allowed to do this solely here in Ohio?
Through the vice chair to ranking member, we believe so. That's why we brought it before you today. I did pull out some numbers. I think I have them in the back here. So there are several states that have taken action on this already. Ohio is just one of those several states. I'd be happy to share with you this information that we received from the Council on State Taxation. It talks about, I think there's 55 different versions of these bills throughout the country. I wish there was more uniformity from the federal level on this, but it seems like they passed this decision to the states, allowing these states to act. And again, I'll send all this information to your office so you can see.
Are there any other questions? All right. Seeing none, thank you so much for your testimony.
Thank you.
Thank you.
to expand the research and development tax credit to apply to income tax. And we have representatives Daniel and Jim Thomas on this one. And two of our esteemed members. And by the way, as you guys are getting ready, I believe that Mayor Ron Antle, that came in and testified from Boston Heights previously, when he came in and talked about some other tax changes, This is exactly what he had advocated for. So my compliments on this.
Chairman Romer, Vice Chair David Thomas, Ranking Member Troy, and members of the House Ways and Means Committee, thank you for the opportunity to provide sponsored testimony on House Bill 756. In recent years, the Ohio legislature has made meaningful progress in strengthening our state's business climate. Through targeted tax reform, workforce investments, and regulatory modernization, we have positioned Ohio as a state that is serious about growth and opportunity. One such reform, the expansion of the commercial activity tax exemption was a major win I sorry million was a major win for small businesses and startups in the state However that success also exposed a structural gap in one of our key innovation tools Ohio's Research and Development Tax Credit. Under current law, Ohio's R&D credit is only applied against the commercial activity tax. As a result, these small and growing companies we intended to help are now largely unable to utilize the credit at all. nationally small businesses account for roughly 30 percent of all u.s r&d activity yet they are the least likely to benefit from ohio's current credit structure due to the cat limitation house bill 76 addresses this issue directly by allowing the credit to be applied against a taxpayer's income tax liability ensuring that more ohio businesses can actually benefit from the incentive ohio is currently less competitive in R&D incentives compared to other states and the federal government. If businesses cannot access or effectively use a tax credit, it does not function as an incentive. In today's economy, states must compete aggressively to attract and retain research activity. At the federal level, the R&D tax credit is broadly usable against income tax liability and is partially refundable for certain small businesses, making it significantly more accessible than Ohio's current structure. More than 35 states offer R&D tax credits and the majority allow those credits to be applied against income tax, payroll tax, or are fundable in some capacity. States like Texas, Pennsylvania, and even California offer more flexible or more generous structures, often allowing longer carry-forward periods, refunds, or broader applicability. This makes their programs more attractive to high-growth firms. Ohio's credit by contrast is nonrefundable and limited in such use, which diminishes its real-world value despite being set at 7% of qualified research expenses. This results in companies looking to scale and innovation have stronger incentives to locate or expand outside Ohio. Now I'm going to turn it over to Representative Daniels. Thank you very much. So, again, with what Mayor Antal brought, he brought a lot of information about the importance of these tax credits. Research and development is critical to competitiveness across all industries, not just traditional manufacturing. R&D is no longer confined to laboratories or industrial settings. It is embedded in how modern businesses operate to improve efficiency and to remain competitive in a rapidly evolving market. As someone who's owned and operated a trucking company, I've seen firsthand how innovation drives competitiveness. R&D in this sector includes route optimization, fuel efficiency technologies, telematic systems, and safety innovations. In fact, in my industry, my company, myself, when natural gas trucks started to come out, we spent somewhere in the neighborhood of $70,000 to retrofit a diesel truck to test natural gas use. Those are the types of things that can't happen if you don't incentivize that behavior. According to the American Transportation Research Institute, data-driven optimization can reduce operating costs by 10 to 15 percent, which is the difference between profit and loss for many carriers. Ohio's largest industry, agriculture, relies on R&D as well. Ohio farmers are increasingly reliant on precision agriculture using GPS mapping, soil analytics, and data modeling to improve yields. USDA data shows that precision agriculture can increase productivity in our food by 15% while reducing the farmer's input cost. That research and development is happening in the field, not in the lab. The bottom line is that innovation is not industry specific. It's an economic wide. It's economy wide. Our policies must reflect that reality. House Bill 756 is targeted, fiscally responsible, step towards Ohio's competitive position. This bill does not reinvent the credit. It makes it usable. House Bill 756 does not change the existing 7% credit structure and eligibility requirements tied to federal definitions or qualified research expenses. The bill simply allows the business to apply the credit against income tax liability. This expanding the access without creating a new program. It also preserves safeguards such as non-refundability and carry forward limits ensuring fiscal responsibility by the business. At its core, House Bill 756 is about ensuring that Ohio remains competitive in a modern economy. If we want business to invest in new technologies, develop new products, and create the next generation of jobs here in Ohio, we must ensure that our policies support those types of decisions. Right now our R&D tax credit falls short. House Bill 756 empowers small business, strengthens key industries, and signals that Ohio is serious about competing, not just regionally, but nationally, for innovation and investment. Thank you for the opportunity to testify.
We be happy to answer any questions you might have Thank you to both of you for your testimony I know that with the changes we previously made to CAT about 90 of small businesses now do not pay 90% of the total businesses in Ohio, including small businesses, do not pay the CAT. That's essentially made the R&D credit, that 7%, unusable for small business. I appreciate that. This is a great idea. I'll open up for questions if anybody has any questions. Seeing none. Thank you so much. You did a good job.
Thank you.
That constitutes the first hearing on House Bill 756. Now, we're going to have two more members of this committee testify. We have House Bill 762 to exempt certain vending machine food purchases from sales tax use, and we're bringing it forth for its first hearing, and we're going to hear from Representatives Lear and Thomas. And Representative Lear, I know that this is a discussion that you and I have had. I know this is something that you've worked on significantly in the past, whenever you're ready.
Thank you, Chair Romer, Vice Chair Thomas, Ranking Member Troy, and members of the House Ways and Means Committee. We appreciate the opportunity to provide sponsor testimony on House Bill 762 and maybe a little entertainment as well. House Bill 762 addresses an inconsistent application of Ohio's sales tax law affecting vending machines and micro markets. Under current law, food sold for off-premise consumption is not subject to sales tax. Vending machines and micro markets operate in the same way, offering prepackaged items intended to be taken and consumed elsewhere. However, court interpretations have created an unintended outcome. If seating is placed close enough to a vending machine or micro market, the sale may be treated as an on-premise dining and taxed. This is true even though the product transaction and seller remain unchanged, and vending operators do not control the placement of tables and chairs in shared spaces like offices, hospitals, or public buildings. This has led to a subjective standard, inconsistent enforcement and uncertainty for businesses. For example, in the Huntington building across from the Statehouse, a customer may purchase a snack from a micro market and be charged sales tax because of nearby seating. Yet a similar purchase from a nearby counter, such as FUDA, is treated as to-go and not taxed. Same setting, same behavior, different tax treatment. House Bill 762 simply clarifies that food sold through vending machines and micro markets is not subject to sales tax. This ensures consistency, predictability, and fairness. Importantly, the bill does not expand existing exemptions. Items that are currently taxable, such as soft drinks, will remain taxable. Thank you for your consideration of House Bill 762. I will now turn the rest of the conversation over to my joint sponsor, Representative Thomas.
Thank you so much, Chair, ranking member, members of the committee. Thank you, Representative Lear, for allowing me to join you on this bill. This one just makes sense. And if it's okay with the committee, I'd like to demonstrate real quick. So Representative Glassman loves V-8s. V-8s are taxable regardless of whatever you get in the vending machines. But he also loves peanut butter filled pretzels that you can buy in the vending machines that could be taxed or could not be taxed. So the vending machine is right here, and if there are chairs and tables, and if the chairs and tables, though, are literally right here, those pretzels are taxed out of the vending machine. But if the chairs and tables are right here, they're not taxed. And this bill essentially seeks to clarify and to say that should not matter, and we should not have someone from the Department of Taxation who is literally out measuring by vending machines for their job to say how close are the tables and chairs, and should that be a taxable item or a non-taxable item. Seeking uniformity, actually cost savings, and something that's good for all consumers is the intent and the goal of House Bill 762, and with that, we'd be open to questions.
Thank you so much. I appreciate the demonstration. I don't know if we've ever had that before, so good job. With that, I'll open up for questions. Do we have any questions? Representative Rogers.
Thank you, Chair. To the sponsors, thank you for bringing this forward. My question is what's the necessity of the tax? So if this tax goes away, what happens? Because I know when we eat out at a very eerie dine-in, they charge you a tax to help with the cleaning. How would this impact our rest stops and things of that nature?
Through the Chair to the representative, it shouldn't impact them. The rest stops shouldn't be charging tax, but if they are and it's just for vending food, then this would take that away. From what we've seen so far, it's going to be a very insignificant amount, but I'm sure we'll get that from the fiscal note here shortly.
Follow-up?
Other questions, comments? Seeing none, thank you so much. That will constitute the first hearing on House Bill 762, and with no further business to come before the committee, we are adjourned. you