After hitting several speedbumps along the way, the state’s transportation budget is finally on the road to Gov. Mike DeWine’s desk, fueled by a significant hike in gasoline and diesel taxes.

Adoption of the $8.5 billion transportation budget (HB 62) comes two days after the March 31 deadline. Leaders of both chambers worked behind the scenes to reach a compromise on the size of a gas tax increase. They ultimately settled on 10.5 cents per gallon, bringing the total to 38.5 cents. That figure is closer to the House-passed version of 10.7 cents per gallon than the Senate-approved measure that set the increase at 6 cents. The difference was the major sticking point in the negotiations.

The deal also boosts the state’s diesel fuel tax rate by 19 cents to 47 cents. Both increases are effective July 1.

“This is something that, frankly, had to be done if this state was going to move forward,” Gov. DeWine said in a joint press conference with legislative leaders after the vote.

The governor and the House last week agreed to an 11-cent increase in the gas tax and a 20-cent increase in the diesel fuel rate. However, the upper chamber resisted those figures.

“We’ve tried to focus all along not on a specific number for the tax rate but identifying what ODOT’s needs were, what local governments’ needs were and figuring out how to fund those,”
Senate President Larry Obhof (R-Medina) said.

The gas tax increase will generate $535 million per year. The increase in the diesel fuel rate will bring an additional $330 million annually into the state’s coffers.

About $524 million will go to the Department of Transportation while local governments will receive $381 million.

Overall, the measure is $346 million short of the budget proposed by the governor. (Appropriation Spreadsheet)

Gov. DeWine said the difference between his approach to the bill and that of the General Assembly was that he was looking at the problem a decade down the road, while lawmakers considered that technology might change in the next few years.

“It became clear to me that the legislature looked at this a little differently than I did. Their point, I think, was very well taken,” he said. “That is that things are changing. Cars change. The situation in a few years may be very, very different.”

The governor’s proposal sought to increase the gas tax by 18 cents and index the rate to inflation.

“The real difference is not in the first year or the second year,” he said. “The real difference you see between how we approached this is I was trying to get a fix for 10 years. That may have been over ambitious to try to do that. We may have gotten it fixed for a few years.”

Despite paring back his request, Speaker Larry Householder (R-Glenford) praised the governor for seeking the tax increase.

“It would’ve been easy for him to say we’re going to borrow a little bit of money and kick the can down the road, but that is not what Gov. DeWine chose to do,” he said.

President Obhof also spoke highly of the compromise between the House, the upper chamber and the administration.

“I think where we ended up, working with the governor, with the House and with the Senate, was a good landing place for the state of Ohio and for our future,” he said.

Conference Committee:
Adoption of the conference report came after conferees voted 5-1 on the compromise document that also repeals the front license plate requirement on July 1, 2020; imposes an annual fee of $200 on electric vehicles and $100 on plug-in hybrids; increases the deputy registrar fee to no more than $5.25; and creates the Road to Our Future Joint Legislative Study Committee. (Amendments; Comparison Document)

Sen. Bob Peterson Peterson (R-Sabina) was the lone conferee to oppose the report.

The conference report also includes language to (Amendment Sheet):

• Allow the Department of Transportation to use General Revenue Funds for a 27th pay period.

• Remove a provision to make $5 million per year available from the Oil & Gas fund to counties in which fracking is occurring.

• Increase the Earned Income T ax Credit.

• Require the study of an Eastern Bypass.

• Allow compressed natural gas to be taxed at the diesel fuel rate after a five-year phase-in.

• Curtail the use of traffic cameras.

• Maintain $500,000 in funding for repairs to North Bass Island docks on Kenny Road.

• Revert to the 2003 distribution to townships for new gas tax revenue.

• Study the Ohio River’s economic impact.

• Eliminate the Financial Responsibility Random Verification Program.

• Allow for variable speed limits on two additional roadways.

Gov. DeWine said he will review the bill and determine if any language will be vetoed.

On the provision to eliminate the requirement that cars have a front license plate, the governor said it is “not something that I’m excited about,” but that lawmakers gave the administration a year to review it.

“One of the things that we did do is put in here a year period of time where we can see what technology is out there and if there’s another way to balance this,” he said.

The administration wants to ensure vehicles can be identified, while at the same time balancing the interests of car dealers and people selling vehicles out of state, the governor said.

Conferees last week were able to resolve some of the minor differences between the chambers on the bill. In doing so, they also set the level of funding for public transit at $70 million each year over the biennium. (See Gongwer Ohio Report, March 28, 2019)

Sen. Nickie Antonio (D-Lakewood), a conferee, praised the public transit funding and the changes to the EITC contained in the bill.

“I supported this budget because it will bring more dollars to public transportation, provide an increased tax credit for low-income Ohioans, and bring needed funds to our local communities to fix our roads and bridges—core principles that we fought to include,” she said.

The final version of the measure also includes provisions to:

• Require an ODOT performance audit.

• Leave the regulation of electric scooters to local governments.

• Require the governor to submit the transportation budget within four weeks of the General Assembly’s organization.

• Permit municipalities and townships to levy an additional $5 license fee.

• Cap the CDL skill test fee at $150.

• Convert a $1.50 license lamination fee to a “document authentication fee.”

• Clarify that a refusal to submit to a test when arrested for OVI leads to a disqualification when a CDL holder is driving any type of motor vehicle.

• Prohibit attaching a skateboard to a motor vehicle.

• Authorize a temporary county emergency management program for those counties with a population of between 350,000 and 375,000.

Floor Votes: The Senate adopted the conference report in a 22-10 vote.

Those voting against the measure were Sens. Andy Brenner (R-Powell); Brian Hill (R-Zanesville); Matt Huffman (R-Lima); Steve Huffman (R-Tipp City); Rob McColley (R-Napoleon); Sean O’Brien (D- Bazetta); Bob Peterson (R-Sabina); Kristina Roegner (R-Hudson); Michael Rulli (R-Salem); and Joe Uecker (R-Loveland).

It cleared the House in a 70-27 vote, with eight House Democrats joining 19 Republicans in voting against the conference report. (Roll Call)

Floor Debate: Sponsoring Sen. Scott Oelslager (R-Canton), chairman of the conference committee, defended the gas tax increase.

“This still makes us cheaper and lower in cost than our neighboring states,” he said.

Rep. Oelslager also said it will allow for public safety and economic development.

Rep. Jack Cera (D-Bellaire), making light of the delay in reach a compromise on the measure, joked that he has not been in as many recesses since grade school.

“No one likes tax increases, but I think if we continue to ignore when there’s a great need in our state like there is with our infrastructure then we’re not doing our job here,” he said.

Speaking on the Senate floor, Sen. Matt Dolan (R-Chagrin Falls), a conferee, said the recent impasse was “worth every ounce of energy we spent” although he said it sometimes felt “like the Senate was against the world.”

“Sometimes you might have read about what’s the Senate doing? They’re fighting over a cent or two,” he said. “Folks, one cent of gas tax is $67 million coming from the taxpayers’ pocket.”

Fighting to maintain a Senate-passed increase in the EITC was key, Sen. Dolan said.

“What that does is it says to the very people who are getting up every day and going to work and still struggling…that we knew this increase, while however needed, was going to hurt them,” he said. “Those folks who are struggling now will get tax relief.”

He also singled out language requiring stickers at the pump informing customers of the gas tax amount, establishing the Road to Our Future Joint Legislative Study Committee, and enabling better fuel reimbursement for school districts as a few Senate victories in the legislation.

Sen. Antonio labeled the final spending plan “something I think we can feel good about in terms of the dollars that go back to our local governments.”

“This conference report reflects the wishes, concerns, and also some prudence as far as how we go forward with finding these projects,” she said.

Sen. Teresa Fedor (D-Toledo) expressed disappointment in House language that was put back in restricting the use of traffic cameras, calling it an “assault in our cities” and urging Gov. DeWine to line item veto the language.

Minority Leader Kenny Yuko and Sen. Jay Hottinger (R-Newark) also spoke in favor of the measure on the floor.

Reaction: Earlier in the day, three powerful business groups unsuccessfully warned against bifurcating the gas and diesel fuel tax, calling for the gap to be narrowed as much as possible.

“As the administration and legislature continue to negotiate, we urge them not to ignore the potential harm to Ohio’s economy and to our businesses that could result if the diesel tax is increased by 20 cents, as has been discussed,” Ohio Manufacturers Association President Eric Burkland, Ohio Chamber of Commerce President & CEO Andrew E. Doehrel and Ohio Business Roundtable President & CEO Pat Tiberi said in a joint statement.

Curt Steiner, a spokesman for Fix Our Roads Ohio, praised the bipartisan agreement, but also lamented that the gas tax increase will not automatically increase each year.

“Our coalition believes a higher increase, with an indexing provision to offset the effects of inflation, would have been even better for Ohio in the long run, but there’s no question that today’s significant bipartisan package to increase roadway support and additional funding for public transit is a very positive outcome for our state’s economy and the day-to-day lives of our citizens,” he said.

Clean Fuels Ohio said in a statement that it is “extremely disappointed” about the fee on electric and hybrid vehicles.

“The tax is unfair and will kill jobs and innovation in Ohio. This tax shuts the door to electric vehicle market growth in Ohio, as it would make our taxes the highest in the nation, along with Georgia and West Virginia,” Executive Director Sam Spofforth said.

Policy Matters Ohio praised the final version of the measure.

“We needed to raise revenue to make sure Ohioans are safe while they travel on our roads and bridges,” Amanda Woodrum, a senior researcher, said in a statement. “It’s encouraging that lawmakers finally recognized this as well as the need to make Ohio’s tax system more fair by reforming the state Earned Income Tax Credit. However, they missed an opportunity to do so much more.”

Volume 88, Report 63, Article 1