Ohio Senate General Government Committee - 9-29-2026

So to start, I would like to read a short Bible verse, and that is from Proverbs, and it is Proverbs 3, verses 5 through 6. Trust in the Lord with all thine heart, and lean not into thine own understanding. In all thy ways acknowledge him, and he shall direct thy paths. If you'd stand with me for the Pledge of Allegiance. I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. All right. With that, would the clerk please take the roll?

Vice Chair Serena. Here.

Senator Ryan is here. Senator Timpkins?

Here. Senator DeMora?

All right. Very good. With that, we do have a quorum present, and I would ask the members to take a minute, look at your iPads for the meeting minutes from June 10th. Are there any additions, subtractions, or changes to those minutes? Seeing none, the question is, shall the minutes be agreed to? And without objection, the minutes are agreed to. All right. Again, I have to say it is great to be back. And the reason that we are back today, of course, is to discuss Ohio's fuel tax. As we are all keenly aware, over the last year, prices at the pump have increased dramatically, affecting not only business owners, trucking, farmers with their tractors, the price of diesel, and to every Ohioan who fills up their car at the pump. No one is really immune. And I looked today, the average price per gallon of gas and diesel, I wanted to compare it to what it was a year ago. And here in Ohio, and this is by AAA, the price of regular gasoline a year ago was $2.87 a gallon. And today, the average price in Ohio is $4.32. That is a 50% increase. Diesel is even worse. About a year ago, the price of diesel was $3.67, and today it's $6.73 a gallon. That is a staggering 83% increase at the pumps. Now, of course, as you all know, the price of fuel is largely driven by supply and demand economics. However, government also plays a role. We layer taxes on top. And these taxes are used, of course, to pay for roads and bridges. I mean, it's used for a good cause, but the Ohio fuel taxes, let me just, just a reminder where we are. Right now, the Ohio tax on gasoline is 38 and a half cents per gallon. You add that to the federal tax for gas of 18.4 cents, and we get 56.9 cents per gallon of regular gas. And that's just the tax component. Diesel, of course, is even more. Currently, Ohio's tax on diesel per gallon is 47 cents The federal tax is 24 cents bringing it to a total of 71 cents I do want to note that in Ohio we voted back in 2019 to increase Ohio gas and diesel tax The gas tax was increased from 28 cents up to what it is today, 38.5 cents, and we increased the diesel tax from 28 cents to what it is today at 47 cents per gallon. I will note that I voted no on that fuel tax increase at the time because I firmly believe that government will tend to spend the money that it is given. And if we want to force efficiencies and to lower spending, the only way to do that is to reduce taxes or at least hold the line. Although 10 of us in the Senate did vote no, that bill passed and the fuel tax was increased. It is interesting to note also as we look around at other states, including our neighboring state of Indiana, they're starting to take action now on their fuel taxes, to some to suspend taxes and other ways they're providing some relief at the pump. Here in Ohio, we have heard your cries to take action, and that is why we are here today. And I am so grateful for my dear friends and colleagues, Senator Michelle Reynolds and Senator Jane Timken, who are here today to lead us on this issue. And with that, I would like to call Senators Timkin and Reynolds up to the podium to provide an informal hearing on Senate Bill 475. Senators, welcome to committee. You may begin whenever you're ready.

on Senate Bill 475. Thank you, Senator Reynolds. Thank you, Chair Rogner. In addition to the fuel tax holiday, we are increasing transparency at the fuel pump by requiring gas stations to provide itemized receipts to consumers upon request that list the number of gallons purchased, the total pre-tax price charge, the total of federal and state motor fuel taxes, and the total post-tax price charge. $1 million in general revenue fund is appropriated to provide payments of $125 per gas station to cover the cost for compliance with this permanent law change. I am proud that Ohio's strong fiscal position allows us to provide this relief after already implementing a flat rate income tax, providing over $2 billion in property tax relief over three years, and a one-time supplemental $350 million property tax cut for the nearly 710,000 recipients of the homestead exemption, those low-income seniors and permanently and totally disabled homeowners. Ohioans have made their voices loud and clear. They want relief at the pump, and they want their hard-earned dollars to work for them. We owe it to the people of Ohio to provide relief during this time of financial hardship, which is why the bill includes an emergency clause. Passage of this bill tells the people their voices have been heard and immediately puts more of their hard-earned money back into their pockets. Thank you for your time, and we are happy to answer any of your questions.

Senator Blackshear. Yes, thank you, Madam Chair, and thank you, Senators, for your testimony. Just a couple of questions. My first question is, who was consulted in the creation of this bill? Did you talk to any economists? Did you look at other states? Who did you talk to when this bill was drafted?

Follow-up. Okay, follow-up. I'm sorry, to the chair.

Very good. Thank you. Do you have a follow-up?

Go ahead.

To the chair, to the senator. So one of the you're you're actually correct that gas has been rising. However, what has risen that has kind of really prompted this move is that diesel is really, really out of control. I mean, it's very, very high. That wasn't as high back in February as if you take a look back. And then there is action, again, around the country of other states taking this same action. So the time is now. Ohioans are suffering. We're listening. We hear them every day talking about how the price is going up. We do know that there are a number of things that we can't control from the national environment that are going on. But what we can do in Ohio, we should do, and that's why we're here. It's very true. I mean, whether you're a Republican, Democrat, independent, I mean, everyone's feeling the pain at the pump. And so I think it's wonderful that we are taking action to do something, do what we can control. We can't control the entire price. A lot of that, as I mentioned earlier, is driven by supply and demand. But we can control the Ohio tax that is levied. And so thank you for being here today to do that.

Through the chair to Senator DeMora, I think if you take a look at what Indiana has done, Their prices, comparative to Ohio, with the tax reduction, those prices, as I understand it, have not spiked. And as Senator Rogner said, the price of diesel and gas is a supply and demand issue. There are also consumer protection provisions in this bill. We have an attorney general who can prosecute those who are not dealing with the consumers appropriately. and I just want to clarify, you made a comment about the roads and bridges. None of this money is coming from the funds for ODOT.

there are provisions in the bill that make sure that there is fiscal accountability and oversight with the Department of Taxation and the Attorney General's office for compliance. There's also money that is allocated to help them to get there, and there's also time to help them get there. But I guess my question back to you is that should we not try? Are you suggesting that because this is difficult, because this is hard, that we do not try to give relief to Ohioans who need relief right now?

Very good. Well, I would like to take a minute and thank Senator Serino for stepping in for Senator Gaviron for this committee hearing as well as tomorrow as well. So, all right, any additional questions? Yes. Senator Blackshear.

Through the chair to Senator Blackshear. Look, this is an issue that is of immediacy, I believe. And this is a critical time period for many consumers, especially those who every day fill up their gas tank. And I think that this is always something that we can revisit. But I think that this bill hits the exact balance of making sure that the funding for our roads and bridges is fully there. There is no negative impact, by the way, on our local municipalities, and there is no impact on the Ohio Department of Transportation. So I think that this bill is a good balance and gives the relief to Ohioans that they desperately want.

So even if it provides one, two, three, 10 cents, 15 cents, 40 cents, it matters. It matters to Ohioans that are feeling the pain, and we need to make sure that we do something about that. I also believe that, as Senator Timkin just pointed out, it provides immediacy, but I think that a short-term solution is something that we want to do right now because economic factors change all the time, and we are also approaching the holidays. People are going to be traveling for the holidays. At least they want to travel, and this will allow them that opportunity to be able to do so. So as we come back to the next General Assembly and there's new budget, you never know what the economic factors are looking like nationally. So a short-term solution is the right approach to take at this time.

And we do have another question here or a statement from Vice Chair Serino.

This bill was also indicated to receive all testimony as well, so I'd like to call up those that are here to offer in-person testimony, starting with Rick Carfagna, the Ohio Chamber of Commerce, who is here today as a proponent. Welcome, Mr. Carfagna, and former colleague and dear friend.

Thank you for your testimony today. Are there any questions?

Through Chair Rogner, Senator Moore did not.

Chair Rogner, Senator DeMora, I mean, gas taxes are constantly fluctuating. Is the war contributing to that? I would argue yes. Is it the sole contributor? Absolutely not. There are all kinds of different variables that go into the volatility of fuel prices in the market.

thanks for the opportunity to provide testimony on this bill, which would temporarily reduce the state excise tax on gasoline and diesel fuel. My name is Tony Ehler. I'm a partner at the Voorhees Law Firm, where I serve as chairman of the tax committee. I represent today the Ohio Energy and Convenience Association, which is a proud affiliate of the Ohio Council of Retail Merchants. And I'm testifying on behalf of their membership. A little bit of background about me. I specialize in state and local tax. My subspecialty is excise tax, which includes sales taxes and motor fuel taxes. I've been practicing in those two areas for almost 40 years. I've helped members of the House, the Senate, the governor's office through various legislative changes in the motor vehicle fuel tax, whether that's to expand the tax, to cover retail dealers, practical changes that would incorporate dyed diesel fuel, as well as rate changes. I've served on committees involved with the Department of Taxation in making the tax efficient and effective. I don't know that you can identify a more efficient tax than the motor vehicle fuel tax. It raises billions of dollars, and there are less than 10 people at the Department of Taxation administering this tax. You think about that return. Unbelievable. it's a great tax. But it's not a sales tax. It's not imposed as an addition on the price that you see advertised, like if you buy a pair of pants or a tie, pay $100, and then you go to the cash register and see that it's $108. It's not like that. It is buried higher in the chain. It's actually at the last wholesale transaction, which is typically below the terminal and refinery rack and before it gets to retail. So the price that you see on the street at the pump is a tax-included price, both federal tax and state motor fuel tax. And there is no sales tax on that fuel. The Ohio Energy Convenience Association and the Ohio Council of Retail Merchants desire to provide relief quickly during the period of historically high fuel prices by virtue of this reduction. The industry itself feels pressures and bear many of the costs throughout the supply chain. The goal of these two associations and its members is to be a resource to this body and not stand in the way of progress, not stand in the way of savings to the driving community, but to provide assistance in making sure that the changes being proposed by this bill are done effectively and efficiently. At that point, I'm going to go a little bit off script. You have my written testimony, which we cobbled together after we saw the initial bill yesterday. I'm going to provide a little background on how motor vehicle fuel tax works, really. We have terminals in the state of Ohio, and we have refineries, and they produce fuel or they bring fuel in. trucks that you see over the road, they go load up that fuel. That fuel, when it's taken from the racks, is taxable at that moment. Unless it's sold outside the state or unless it's sold to another type of dealer that has an exemption. So it's upstream. The way the fuel gets to the street or the pumps is that companies will carry that fuel to the retail station. There are many prices that are being paid, depending upon what part of the state you're in and depending upon your relationships with those suppliers. You could buy fuel based on futures and pricing through the futures. You could have contracts. You could buy at the stated rack price. So my point here is that the price of the underlying fuel going to competitiveness, capitalism, and free market, the price that's buried in a gallon of fuel varies tremendously depending upon which part of the state you're in. And I'm not talking about the tax, just the fuel. Then when you get the fuel to a retail station, you may have three or four tanks at 8,000 gallons a tank, and you've lowered your inventory to 1,000 or 2,000 gallons. Maybe you bought those gallons at $4 a gallon, and now you're going to have to buy fuel at $4.25. What's your price? You've got fuel in the ground at $4, and you've got new fuel at $4.25. Or it could reverse, and you have fuel at $4, and you buy new fuel at $3.75. What's your price? We'll get to that problem later when I address that part of the legislation. But the point is, generally, the price in the ground for that fuel varies all over the state. and we're going to have some real problems with this bill, in coordinating an attempt to measure whether or not all of that money is saved from the fuel tax holiday is passed along to the consumers. The first point, after the general comments, the itemized receipt requirement of the bill is not practical. As the senator mentioned previously, no one provides those receipts now. at least not the information that's being required in this bill. No one does it. We've canvassed members, even the large ones, and they say they can't turn this around. They cannot reprogram their point-of-sale equipment in time to meet the requirements, nor should they. There's a statute on the books right now. 5735.10A provides that no retail dealer shall be required to issue or maintain invoices relating to retail dealers' sales of motor fuel. The state said you don't have to do it for 50 years, 70 years, I don't know how long, but they've not done it because the state said you don't have to. And now the state in seven days is going to say you have to? It's not practical. They cannot do it. and to impose that requirement and then penalize them for it when another statute that, as far as I can tell, will remain on the book, says you don't have to, will cause real problems with enforcement. I mean, as a lawyer, I would say, which statute do we follow? So we ask that you simply do away with that provision and rely on the good nature of local vendors who sell fuel and possibly what we've done in the past, which would be to post the price of the tax in the fuel so that the consumers can see what the price I'm sorry, how the price is affected by state motor fuel tax. If you want to say it's one one hundredth of a penny, maybe we can put placards up at the stations, but to require it on a receipt is not going to be possible for the industry to comply with. Next, what Ohio has done with this bill, what it proposes, is really to reverse engineer a floor stocks tax and then to impose a floor stocks tax at the end of the temporary reduction period. That is similar to what Kentucky has done. It's not similar to what Indiana did. Indiana has had some real problems implementing it. I'm a Notre Dame grad. I went to a Notre Dame game a week ago at Michigan State and I drove the turnpike. And you could see, though, that after a period of time, Indiana prices were lower than Ohio prices. As soon as you hit the border, 25 cent difference in the price of fuel. Competition works. Ohio has chosen, though, a more burdensome, administratively burdensome way of doing this in order to bring relief to the drivers immediately. So what it would do is it would say to retail dealers, let's measure how much fuel you have right now on which you've already paid or are responsible for the motor fuel tax, and then apply for a refund, a payment back for that motor fuel tax from the state of Ohio. That would cue a lower price at the pump immediately, as opposed to what Indiana did, which was just lower the motor fuel tax, and let all of the fuel that's already in the system, in the trucks, in the bulk tanks, at retail stations, that fuel was purchased at a higher rate, and it has to be sold. But it's now going to compete with fuel being sold at lower rates. So how do you get rid of that fuel, other than sell it at a loss or keep the price high? So Indiana had some real problems with implementing the tax the way they did. Ohio is doing it in this proposal in a bit more efficient way to get the savings to the public quicker, but it will require some more administrative work by retailers and motor vehicle dealers. I submit that the proposal to file these refund claims rely on statutes that already exist. Going back to 573510, at paragraph A and B, every motor fuel dealer and each retail dealer shall maintain complete and accurate records of purchases and sales of motor fuel and shall procure and retain all invoices, bills of lading, and documents relating thereto. Every retail dealer shall take meter readings and totalizer readings and tank stick readings at a retail service station daily. So we should just tie that refund claim to those required daily totalizers, and that should be, for retailers, a get-out-of-jail-free card. If you're doing that for the state of Ohio already and you use that information on a refund claim, that should be part of the claim and that should be honored by the Department of Taxation as unless they think there some fraud going on Those numbers already exist and that should be acknowledged in the bill I think For motor vehicle fuel dealers which are not retailers they're the upstream company that take from the rack, typically, they should be able to take a credit on their monthly returns. I don't know why they would file for a refund claim, unless you want to monitor that money that way, Since they already file a return, they could just take this money that they otherwise would have had to pay in the form of motor vehicle fuel tax, but because of this reduction, this holiday, they wouldn't have to pay. They would just take that as a credit on their motor fuel tax return, on the front end of the motor fuel tax return. That is the beginning of the tax reduction period. We have this information already, and we should rely on it. At the back end, same thing. We're going to impose tax on fuel that was purchased at a time when it was purchased and the incidence of tax occurs at a time when we were in a reduction period. But now it's going to be sold after the reduction period ends. And so economics are people buying fuel, the price would go back up. They're going to have to pay tax on their floor stocks. their inventory. We have the same mechanism. The retailer should file a claim or file a return with a payment based upon the information that they get every day from the totalizers, and the motor vehicle fuel dealers, those upstream marketers, should include that on their subsequent months motor vehicle fuel tax report. That would ease the administration of this system by the Department of Taxation and we reduce the amount of paperwork. Another part that I recommend is that we should at least coordinate administratively through the Tax Commissioner and the Department of Taxation with IFTA. IFTA stands for the International Fuel Tax Agreement. Ohio's a member of that agreement. And IFTA relates to diesel fuel. And what happens really with diesel fuel is we tax it, excuse me, we tax it among the states, not based upon where you buy it, but based upon where you consume it. Otherwise, we would have truck drivers loading up in low tax states all over the country and then driving on roads where the taxes are higher. So So truck drivers, trucking companies who buy diesel fuel, file reports about the trucks they have and the miles they travel and in what states. And then there's a central clearinghouse that calculates the amount of taxes they've paid at the pump and redistributes that money to all the states. Coordinating that is vitally important, because if we don't coordinate that with IFTA, and IFTA still thinks the diesel fuel price, the tax is high, then we're not really delivering savings to diesel fuel consumers. So we have to coordinate Ohio and that lower rate, temporary rate, with IFTA. I'm not sure that's a legislative requirement, but it's something that we should be mentioning to the Department of Taxation as they administer this. Another point has to do with the benefit of the lower tax being passed to the public. and this is what I was mentioning earlier Fuel is perhaps arguably the most competitive retail commodity that we have I don't know anybody else who advertises their price on the street. I don't know anybody else who has maybe McDonald's and Wendy's, but on four corners sometimes you can find four different service stations competing with one another for volume and sales. and they advertise their price and they are tough on each other. You may not realize this, but oftentimes at retail stations, they are selling gas at a loss. They're selling gas at a loss in order to sell potato chips, in order to sell beer that have higher margins. They sell at a loss. Sometimes, though, there's an inversion. Somebody across the street buys fuel at a higher price and raises their fuel price in order to recover at least a portion of it, that allows you, who bought fuel maybe a week ago at a lower price, to raise your price. Does that mean you're gouging? It means you're trying to make a profit when it's allowable in the market. That's all that means. There are precious few times when they're making that kind of money when competition allows them to make a margin on the retail sale of gasoline. And now we have a section that says we've got to pass the benefit. How are we going to measure that? I'm stumped by that. I have no idea how we're going to measure whether the benefit of $0.38.5 gets passed on to the public when you have pump, we have fuel in the ground that was purchased at $4, and $5 and $3, who's to say that's not margin? Who's to say that's not profit? Frankly, I don't understand it. And you'll have fuel on the ground that is purchased on futures and on contract pricing. I honestly sat back last night, looked at it, and said, I don't know how that's going to be possible to enforce. But this legislation imposes strict liability. This says when the department and the AG's office thinks that they haven't, the retailer hasn't passed on the value, it's a deceptive practice, deceptive fraud. What did they do? Make a profit. I submit to you that they're trying to make a profit, and the competition will make this whole thing work. Competition, free enterprise, will make this work because as sure as we're standing here, if someone is saving 38.5 cents on the wholesale purchase of gasoline, it's going to go to the street at some point. They might make a bit more money in week one. They might lose money in week two. But the vast majority of that is going to come out in the marketplace and the consumers will get the benefit of it. But if we're going to go witch hunting for people who don't pass 38.5 cents, How do you prove it? Who's going to prove it? Who's got the burden of proof? The AG? The retailer? The retailers have fuel from three different refineries at different prices, competing against somebody across the street who bought a week later and who lowered price or who raised price. And they follow the competition. They're following the market. They'll be accused of gouging. I don't think that's fair.

Thank you, Chair. Thank you for your testimony today. I'd like to talk about the two major items you discussed, which is the receipts issue and then the inventory attestation. The latter is more complicated, certainly, and I'd like you to go through that a little bit more in detail for the committee. But on the receipts, which are, I would imagine, traditionally digitally achieved, correct? And so I'm not sure I understand why it would be such a hardship to make digital changes to their systems to be able to reflect the different levels of pricing.

I do, but when you say digital, I'm not – do you mean a paper receipt or do you mean something on the screen? Sorry, may I follow up?

May I have a follow-up?

So I would like to know more about how difficult this hardship really is because it's digital information the output printing it is not the problem. The problem is will they have the information to print in the first place and how can they access the information to break down the pricing as outlined in the bill So if you have further additional information please get it to the chair office so we can look at that And by the way I don want to get into semantics with you

Okay. Thank you. Thank you, Chair.

Thank you, Madam Chair. So here's a hypothetical for you. Someone buys a couple thousand gallons of gas at the station today at the price that we now have it. And I'm trying to explain this again. I guess more in layman's terms. So then this happens, this tax thing happens, and they buy gas next week at a different price, and then the third week they get it at another price. And what you're saying to us is that the way this bill is written, that if the Attorney General somehow thinks that they're trying to make the money they spent on the gas price of today, which is at this level, and gas goes down, that if the attorney general or the department of taxation thinks that somehow they're doing something illegal, then they can be convicted of it, right? And what you're saying is that that's all wrong is because there's stuff in place today to regulate how much, so that there is no gouging of prices, that you have to monitor this stuff and turn in these numbers every day, that if some gas station happened to get screwed with having a high price and they want to make their money back on that price, even if they're 30 cents more than the guy across the street, that they might not be gouging because they had to pay that much for the cost at the beginning. Is that what you're saying to us?

Follow-up. Now, you're probably not an expert on this question, but if the bill passed as is, how many people that you represent from the retail merchants or the fuel, how many people you think are going to be, if it's enforced the way the bill says it should be enforced? And again, I know that different people in different places enforce things differently even though it's the same law. How many gas station owners could theoretically be convicted of felonies when they have done anything wrong?

Thank you, Chair Rogner. So I have a couple of questions. One, at the time that these retailers are making these bulk purchases, they have an invoice. They know the amount that they're purchasing the fuel, correct? So if one week they're buying 22,000 gallons and it's X price, the next week it's X minus. They have those receipts, correct?

are actually passed on to the consumer? I understand your point of competition and capitalism and determining the price. how do you suggest we go about determining whether a retail merchant is actually passing on those cost savings?

Thanks.

Thank you, Chair Rogner, Vice Chair Serena, Ranking Member Blackshear and members of the Senate General Government Committee. Thank you for the opportunity to testify today. My name is Michelle Holtgreave and I am the Legislative Director for the Ohio Contractors Association. OCA is the Statewide Trade Association representing the highway and utility construction industry. Our members build and maintain the roads, bridges, and infrastructure that support Ohio's communities and economy. We recognize the significant input historically high gasoline and diesel prices are having on Ohio families and businesses. OCA members are feeling those same pressures every day as they fuel the trucks and heavy equipment needed to do their work. We understand the desire to provide short-term relief at the pump. As you consider Senate Bill 475 or a temporary suspension of Ohio's motor fuel taxes, OCA's priority is to ensure that state and local transportation infrastructure programs remain fully funded. Ohio motor fuel tax provides critical funding for the Ohio Department of Transportation as well as counties municipalities and townships Any revenue lost during a temporary suspension must be fully replaced so that no transportation project is disrupted or delayed For our members, those dollars translate directly into work on Ohio's roads and bridges and into the paychecks for the men and women who build them. Ohio has made significant investments in its roads and bridges, and maintaining that commitment is vital to our economy. A strong transportation system is essential to moving people and goods and keeping Ohio competitive. Relief for Ohio families and businesses and continued investment in the transportation system they rely on can and should go hand in hand. Thank you very much for your consideration, and I'd be happy to answer any questions you may have.

Thank you.