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Criminal charges against two former first energy executives in the House Bill six corruption scandal and bills to make changes in property tax laws are getting a look.

Thoughts from the Democrat who first proposed the panel to review them.

All this week in the state of Ohio.

Welcome to the state of ohio.

I'm Karen kasler.

It was three and a half years ago that republican Ohio House Speaker Larry Householder and former Ohio Republican Party chair Matt Burgess were arrested.

Almost a year ago, they were convicted of federal racketeering charges.

This week, for the first time, criminal charges were unveiled against the two former first energy executives accused of masterminding and funding the scheme involving the nuclear power plant bailout law known as House Bill six.

Along with charges against the former head of the state's utility regulator, former FirstEnergy CEO Chuck Jones, former senior Vice president Michael Dowling and former Public Utilities Commission chair Sam Randazzo have pleaded not guilty in Summit County to 27 state counts, including theft and bribery.

Attorney General Dave Yost said Jones and Dowling bribed Randazzo, who helped write House Bill six, which included $1,000,000,000 over a decade from Ohio ratepayers for two nuclear plants owned by a first energy subsidiary.

This indictment is about way more than one piece of legislation.

It is about the hostile capture of a significant portion of Ohio State government by deception, betrayal and dishonesty.

The indictment, says Jones, Dalling and Randazzo worked together to, quote, steal the power of government and bend it to the will of FirstEnergy.

Jones and Dowling are accused of paying a $4.3 million bribe to Randazzo, who allegedly set up shell companies to skim money from his clients.

The indictment also claims Randazzo spiked a rate case set to come up this year that could have hurt First Energy's profits.

Randazzo has pleaded not guilty to federal charges related to the $60 million House bill six case, which federal prosecutors called the largest corruption scandal in Ohio history.

Householder is serving 20 years in prison for accepting bribes to pass House Bill six.

Borgias is in four, five, four working to stop an effort to repeal the law.

Governor Mike DeWine appointed Sam Randazzo to head the Puco in 2019.

A few months before House Bill six passed, he said again this week he knew Randazzo had worked for FirstEnergy but didn't know about the $4.3 million payment, which the indictment says Randazzo told DeWine's chief of staff was a buyout of a consulting agreement.

You know, I've said that if I knew that piece of information, you know, we would not have appointed him.

You know, if we if we knew that that amount of money.

So, you know, again, you go with the information that you go with.

Is that something that I wish we hadn't done?

Was Sure.

I wish we hadn't appointed him.

We did not know all those facts.

I did not know all those facts at that time.

DeWine has been subpoenaed in a civil lawsuit filed by first energy investors.

Lieutenant Governor John Houston is set to give a deposition in that case in the next few weeks.

The nuclear bailout in House Bill six has been repealed, but the rest of the bill remains, including subsidies for two coal fired power plants.

There are several bills that would seek to make major changes in tax policy.

In Ohio, Republican backed measures in the House and Senate would eliminate one of the state's main sources of income, the personal income tax, and erase what had been the state's chief business tax.

The commercial activity tax.

All told, based on current numbers, this will be a cut of around $13 billion, and a few bills would make changes in property taxes as homeowners are seeing tax bills with huge increases.

Democratic Representative Dan Troy suggested a House committee to look into property tax law changes in the previous General Assembly.

A joint committee of the House and Senate was formed in the state budget and Troy is on it.

On this issue for homeowners, it's the value of their homes and what they're paying and what they're willing to increase through levies and then schools and communities.

It's whether they can pass levies on money issues, and if they don't, what impact that's going to have on the schools and on the services those communities provide.

So how do you address these dueling concerns here?

Well, I think one thing the state has over the years passed a lot more of the obligations for some of these services back to the local level.

If you recall, years and years ago, our mental health system was a lot of state institutions are development adjustability programs, were state institutions.

But we moved those to the community level, which certainly made sense.

It's a much better system, all that, but the money never followed.

So we put more of the burden on local entities to fund those things.

And I can remember talking to my Adams Board people and they were saying 20, 30 years ago, 75% of their money was coming from the state line item.

Now, maybe only about 25%, though.

So there's more pressure for these local services.

Obviously, the state is moving to a fairer school funding formula.

But, you know, we really need to try and pick up more of the burden so there's less demand on local property taxpayers for that.

But somehow we have to disconnect the fact that because your property values go up, which is good, it's a good return on your investment.

Your property taxes should not go up commensurately because you don't necessarily have the wherewithal to pay that.

They don't right now.

I mean, House Bill 920 does keep that from being the case.

It does.

In some cases it does in certain cases, except there are three exemptions.

There's the inside millage, ten inside mills.

Those are not subject to 920 any the 20 mill floor on schools is not is not subject to 920.

And in a city, if you have charter millage charter millage is not subject to 920 also because that that can grow with that.

So I've asked legislative service is there a way we can lift the little bit at 920 so that there is a little bit of inflationary growth because that has been a complaint from the schools?

I can't get any more money.

That's why I have to go back to the voters again, allow some inflation or growth, but somehow extend that lid or that cap to things like inside millage and 20 mill floor millage and charter millage to allow some growth but not allow windfall growth.

You know that a real burden on the taxpayers and all that.

Unfortunately, I see you saying it's a combination of constitutional changes or statutory changes.

So I think that's one of the things the committee has to sort out.

But I think we have to realize that property taxes, unlike income taxes, which some of my colleagues have said, let's get rid of the state income tax, we've had a graduated income tax in this country since 1913.

It's a fair method of taxation because if you make more money, you pay a little bit more.

If you don't make that much, you're not burdened as much.

Property taxes does not address that.

You can be property rich and income poor.

And so what we really need to do is kind of keep those those tax revenues coming in at the state level, but use a lot of those dollars to buy circuit breakers for people on their property tax, drag drastically increase the homestead exemption, help those people that have difficulty to pay.

And we can do that with state money, but we can't do it if we're just going to basically jettison a lot of this state revenue.

I mean, so so I'm hopeful that we can, you know, look at that and say let's let's bring property tax relief and let's bring tax relief to those that really need it.

There are a couple of bills that would do some of that targeted tax relief or temporary quick relief in a way.

You've got House Bill 187 providing three years of property tax relief for seniors to 63, a property tax freeze for homeowners over 70 making under $70,000 an income, the 70 under 70 plan to 74.

Another homestead tax exemption for certain long term homeowners.

But Senator Bill Blessing, who's the co-chair of this committee, which by the way, this was your idea, this committee, he has said that there might be a problem in making these short term changes when really long term issues need to be addressed.

And he's worried about the impact of these short term changes.

So how do you get quick relief for homeowners who are looking at their tax bills now and saying, I can't afford this or I'm concerned?

Well, I think that was one of the purposes of the committee is, first of all, the first part of his education.

First of all, we have got to understand how this system works.

We need to educate ourselves, the public, as to how this system works and then figure out, you know, what is the fairest method to do that.

We should not do it piecemeal.

We should basically say that, you know, we're going to create a permanent inflationary increasing circuit breaker for those people who are struggling and want to remain in their homes, but really don't have the wherewithal to to, you know, address their property tax burden.

I think we can also impact on the spending side that property tax burden by the state may be picking up a little bit more and stop shifting more and more responsibility back to the local governments on some of these very important programs that are very contributory to what we consider a civilized society.

And also maybe take a look at, as I've said before, and I co-chaired a commission about 12 years ago on local government reform and collaboration.

Maybe we need to look at some consolidation or some streamlining of a lot of our local governments to say, let's not keep trying to fund the service model the way it exists today.

Maybe let's change the service model to reflect the realities of the fact that we just can't keep banging on people for more and more property taxes.

That's interesting, because that's an idea that former Republican former Governor John Kasich talked about when he was cutting the local government fund is streamlining local government and consolidating services.

And here you're talking about.

Yeah, well, I just think it makes I mean, I'm I'm a consider myself a conservative Democrat, but I've said that the problem with so many governments is that there's so much overhead in the government.

You've got to have a director, you've got to have a payroll person, you've got to have a legal counsel, you've got to have an office, you've got to have a h.r.

Person and all that and all of that.

Overhead is not getting any services to the citizen out there.

We need to maybe consolidate some of that overhead into more centralized approaches so that we can get more dollars out there on the front line to provide the services that the citizens really need.

The property tax burden has shifted dramatically away from businesses and commercial taxpayers to residential and agricultural tax payers since 1975, when residential property made up 48% of the school's tax base.

Now it's 72%.

That's a result of zeroing out the tangible personal property tax, and that's on businesses.

There are also exemptions like $9 billion worth of exemptions that are offered by local governments.

The state offer also offers some exemptions as well.

Senator Blessing has said he's concerned about that, but that seems to be the way that Republicans in particular have talked about keeping business here and bringing business here.

Other states have these incentives.

We have to do them do well.

As I said in this morning's committee, we had a meeting.

I said, now let's go back to what enterprise zones were.

Enterprise zones were Ronald Reagan standing in the middle of the South Bronx in the 1980 campaign saying we need some sort of government program that creates economic opportunity in an area like this that normally would not happen to to to allow economic opportunity for the citizens who live in an area like this.

And these things should really be be reined in so that they they all have to meet the budget for doctrine.

But for the existence of this tax abatement, this economic development cannot happen.

I think right now these things are these things should be used in extraordinary circumstances.

They are used across the board.

I mean, it's it's you know, they're used in areas that really aren't struggling.

And so so, yes, we definitely have shifted so many property taxes are going to be paid.

But what is happening here is more and more of those property taxes have been shifted to the homeowners burden and less and less to the business concerns.

I mean, I think somebody said 21% of the business property in Ohio is exempt from property taxes.

And so I think we really need to and all of the county auditors that came in from around the state to testify, Democrats and Republicans, all said that is a significant problem.

The amount of money that is removed from our taxable base certainly requires us to be a little bit more that, you know, demanding on homeowner property taxes.

The upshot of all that is pretty much that taxpayers more as more taxpayers are exempt.

That makes a smaller pool of taxpayers who pay and therefore they're paying more.

Right?

Yeah, that's the case with any taxation.

You know, I mean, it's like when when, you know, we're starting to what concerns me by getting rid of the state income tax and getting rid of the commercial activities, taxes.

I've been doing government for a long time and I like the diversified revenue stream, so I'm not putting all my eggs in one basket.

And if we start putting all our eggs in one basket, you know, we're going to be very dependent on that.

So I think what what you have to do is you have to make sure that the, you know, the application of the taxation is uniform and as fair as possible.

I think that is I mean, nobody nobody likes taxation, everybody hates taxation.

But unfortunately, if we want to provide the services that we consider essential to a civilized society, we're going to need some level of revenue to to do that.

And I think it's imperative for us to make sure that we do that is fairly is possible.

And then we make sure the load is nobody's overburdened but make sure nobody's under burden.

There was a question about that that specifically talks about have the costs of services gone up as much as property taxes have, and can local entities potentially help out by because they apparently have gotten big revenue here, they can maybe return some of that to homeowners?

Well, that's that's another issue that has come up in the hearings and all that.

And it was interesting how one auditor said their prosecutors said they couldn't do this and another auditor said they're prosecutor says, yes, you can do this.

So one of the things I think we need to do is empower the budget commissioners to say, listen, we're not going to let you stockpile tax revenue.

You know, because I have entities, you know, have told me that, well, hey, I don't have to go to the ballot again for 22 more years because of the money I'm stockpiling and all that.

I don't think that's the way it's worked.

That money should stay in the pockets of the taxpayers until the governmental entity needs it.

So I think there's a there's a way there that if we start to get, you know, a little bit more control on how much revenue we want, we want a governmental entity to get all the revenue it needs.

We don't want it to get more than it needs at the expense of the taxpayers.

And you think that some of these governments are getting more than they need right now?

I'm aware of some.

I mean, I'm aware having been a county commissioner, I'm aware of one entity.

We're aware of that.

And I'm not going to mention it.

But certainly in the county where the the the principal operator of it came in and said, I need you to increase the 3/10 of a mil to 8/10 of a mil.

And if you do that, I won't I'll be all set for the next 22 years.

And so, in other words, by stockpiling money, basically, you know, I'll always be able to meet my inflationary growth because I'll always have that big reserve there.

And we had we had a little bit of argue about that, but compromised.

Senator Blessing has said one of the biggest problems here is that the housing market is out of whack and housing needs to be dealt with.

In the property tax question.

There is just not enough supply to go around and that's driving up costs.

So how on earth do you fix that, especially if you're trying to do something fairly quickly?

I think that, you know, we just need to, you know, ensure that, you know, we can we can generate more affordable housing in the state of Ohio.

You know, and I think that's one of the problems.

I mean, there's quite a lot of housing going on development in my area.

But, you know, when somebody we look at some of the prices here, let's say is this, you know, is this really affordable housing?

So I think that's that's part of the issue.

But I don't think that's a solution that if we you know, if we really grow the housing market, it's going to take care of property tax value because we you know, we want people once you've made the mill just a single investment you probably make in your lifetime on a new house you want you want that investment to to inflate value and all that.

We just have to somehow say that we ought to make sure that our that inflation is taking place, that somehow your property tax burden is predicted or modified.

So that you're not paying commensurate with that increase in value.

Are you pushing up against some problems here in terms of Republicans who are in the majority in both the House and Senate, have wanted to push for tax cuts.

They've wanted to push for things that they believe will bring more business.

Does that really come in conflict with some of the things that will help homeowners?

Well, it used to be.

Me and all the other entities.

I mean, I was here.

I was Ways and Means chairman 30 years ago here.

And I had a bill to rein in a lot of these enterprise zones and tiffs and the Sierras and put some limits on them, put some additional conditions on this.

And I was told by the then Speaker of the House, Vern Rife, you know, that now we're not going to have this caucus perceived as being anti economically development.

And I said, well, I would rather be perceived as being pro tax fairness.

And so but but back then, you know, the whole idea was, we've got to generate more jobs for hire.

We've we can't we can't stand in the way of creating more jobs.

We're having a hard time filling the jobs we have right now.

I would rather see if we're going to give a break to to to businesses on their property taxes.

I would rather say just just don't pay that and improve your bottom line.

I would say, no, you pay your property taxes, but we'll give you money back for workforce development, because that's really what we need is to develop our workforce, not to just do that.

But but again, I think we've just got to look at the fact that these trends have taken place, that homeless.

I've seen these tax incentive review committees that are supposed to review these tax abatements.

I've seen them in my area where a company will say, we're going to create 50 jobs over the next ten years.

And after three or four years they've created three in the tax incentive review committee says, Well, you haven't kept your promise.

They said, Yeah, we've had a downturn in the economy.

Our big our big one of our big, you know, demand the people that we would supply.

They've fallen out of the picture.

But, you know, we still got six years on this and the tax incentive review committee will say, okay, we'll keep trying and we'll let you keep the tax abatement, all that.

Now, as a homeowner, you're going to the county treasurer and say, I've had a downturn in my personal economy and and I really am struggling.

And could you give me a break on my property taxes?

That's not going to happen.

So I think that again, I think there's just a lot of things we have to do.

But again, I think we have to balance this thing out that that both the local level and the state level, we're all serving the same constituents.

And I think we need more of a partnership saying understanding that if you're going to have to fund a lot of these services locally with property taxes, we from the state government have got to help out.

We've got to help out either by paying more of the cost of the service or creating additional circuit breakers for those people who are struggling to pay their property taxes.

And that's what I think is mainly the route we have to go, plus really take a comprehensive look at all of these tax incentives and tax abatements.

I mean, I have a real problem with state tax increment financing.

So if you vote X amount of mills for developmental disabilities or you vote X amount of bills for mental health services, or you vote X amount of bills for senior citizens, programs, the law right now allows that local government to say we are going to divert those revenues to paying for waterlines and sewer lines and new roadways into this particular development.

And and of course, the courts will say, well, it's legally permissible because the General Assembly allows you to do that by argument.

Is that.

But it's not morally right.

If people voted money for mental health services or developmental disability services or for social children's services to deal with abused and neglected children, I mean, I just think it's morally wrong that you can take those dollars and say we are going to tip them, we're going to.

But, you know, the argument is, well, they're they're still paying the taxes.

You know, the business is still paying the taxes.

Yeah.

But all the other people, you know that.

What about all the dollars that are going to be shortchanged, these particular programs?

I think I think we really need to I really like to reform the whole tax increment financing process.

And finally, as I mentioned earlier, this committee was your idea.

You had proposed it last General Assembly and it got into this budget as a joint committee.

Right.

How do you ensure that anything comes out of it rather than just recommendations that sit in a binder somewhere?

Well, I've been there before.

I mean, I'm glad I did.

So I'm asking you, I did the joint committee on some of the things we did get through from the from the blue ribbon committee and a little bit of reform and collaboration back in nine and ten, a little bit more.

The removal of sections in the in the rape code that didn't allow governments to coalesce or work together on a particular problem.

I like this.

I like the feeling that I'm getting.

I'm getting opinions and I'm hearing from both sides of the aisle that are pretty much in sync.

I mean, I hear Representative Young and represent a blessing, concerned about the number of property tax abatements from Senator Craig and I and representative blessing or Senator Blessing regarding the fact that so many seniors are struggling to meet their property tax obligations.

So I think that I think there's a consensus of some of the things we have to address.

I, I look at the fact that I think we got to rein in these tax abatements, rewrite those.

I think we've got to come up with a set of circuit breakers to help our folks who are struggling to pay their property taxes.

I think we have to look at possibly empowering the budget commissions of the county.

If they're not, it don't have the power right now to, you know, to ride herd on some of these expenditures, make sure that taxes are not levied in excess of what is really needed.

And I think we have to look at the number of levies we have got, you know, renewal levies, replacement levies, emergency levies.

We have got you know, we've got I think they are in the double digits.

I think so we really, really need to kind of boil this down, I think so that people understand, you know, what what these various things are and just kind of get a handle.

Again, I thought that probably most of the process of this whole exercise would be let's learn, let let's let's try and understand how this system that has been built.

And it's to me, it's like a house that, you know, somebody added a back room on and then they had a little dormer on the top and they added a shed on the back and all that.

And we've added all this stuff on and we have to find out how can we coordinate this thing so that, you know, it's basically a centrally based operation.

You can find interviews with Republican Representative Adam Mathews, sponsor of the Bill to eliminate the income tax and the commercial activity tax, and an interview with the chair of the Property Tax Review Joint Committee, Republican Senator Bill Blessing in our archives.

And that is it for this week from my colleagues at the Statehouse News Bureau of Ohio Public Radio and Television.

Thanks for watching.

Please check out our Web site at state News dot org where you can find our archives or find us online by searching State of Ohio show.

And please join us again next time for the state of Ohio.

Support for the statehouse news bureau comes from medical mutual dedicated to the health and well-being of Ohioans offering health insurance plans as well as dental vision and wellness programs to help people achieve their goals and remain healthy.

More at Med Mutual AECOM the law offices of Porter right Morris and Arthur LLP.

Porter Right.

Is dedicated to bringing inspired legal outcomes to the Ohio business community.

More at Porter.

Com Porter Right.

Inspired every day.

The Ohio Education Association representing 120,000 educators who are united in their mission to create the excellent public schools.

Every child deserves more at OHEA.org.